Employer-Paid Co-Pay-- Taxable?

[sloble@crowleyfleck.com]

Employer pays the employees' co-pay and does not give them a choice to receive cash instead. Can they do this without a cafeteria plan?

[oriecat]

I don't see why not. Sounds like an excludable accident and health fringe benefit. It would need to conform to the requirements, as listed in Pub 15-B.

[papogi]

Since the employer is simply reimbursing the employee for these co-pays, and there is no cash option, then I agree this looks OK. This would be a basic Section 105(b) reimbursement plan, but remember that the non-discrimination rules within 105 will apply.

[Guest Laura Browne]

The amounts that are being paid on the employees behalf need to be included in their taxable income on their W-2 unless the company has a vehicle to have that employer contribution tax free. The flex plan needs to have a caveat to allow employer contributions or a HRA plan would also allow this.

[E as in ERISA]

An employer can always provide 105 and 106 benefits tax free, without any need for a 125 arrangement. There only needs to be a 125 arrangement if there is a choice between a taxable benefit (cash) and the nontaxable benefit.

[GBurns]

RE: "unless the company has a vehicle to have that employer contribution tax free".

The vehicle is a section 105 MERP.