What are the benefits of runing disability insurance in the caf plan?

[Guest msfixit29]

I have a client that is asking if she can run her husbands disability insurance through her flex fund under individual premium. I have been told by a coworker that it is allowable, but not benificial as the benefits will be taxed if they do so. Has anyone come across this and seen any difference?

[E as in ERISA]

If premiums are paid by the individual on an AFTER tax basis, then the disability benefits may be tax free. Since the size of the benefits is potentially much higher than the cost of the premiums, most companies structure the premiums to be paid by the employees on an after tax basis (outside the cafeteria plan).