Reimbursed Insurance Premiums in Section 125 Plan

[Guest tonjer]

We have received a Section 125 plan from a tpa. Pursuant to the terms of the plan, participants may be reimbursed for non-employer sponsored premiums paid for other insurance (health, disability, cancer and term life). 1.125-2 Q&A7(B)(4) states that a health FSA may not treat participants' premium payments for other health coverage as reimbursable expenses. Therefore, a health FSA may not reimburse participants for premiums paid for other health plan coverage. Am I missing something? Q&A5(a) provides the rule that a cafeteria plan cannot defer the receipt of compensation. This section goes on to state that a plan operates to permit the deferral of comp if the plan includes a health plan that is an FSA arrangement and such health plan may reimburse participants' premium payments for other accident or health coverage beyond the end of the plan year. Could this be read to mean that as long as the premium payments do not reimburse for insurance coverage beyond the end of the plan year, it is OK? I have always had the understanding that premiums are not reimburseable under a health FSA.

[SLuskin]

You have to have a separate reimbursement account for private premiums. There are some HIPAA issues with a health insurance policy, but not on policies like dental, vision, etc. You are correct that these premiums cannot be reimbursed through the medical expense FSA.