POP for SPOUSES health premiums?

[sloble@crowleyfleck.com]

Employer wants to set up a Premium Payment Plan so that is sole employee can pay the $300 monthly premium pre-tax--the caveat is that the premium is for the employee's SPOUSE's health insurance. Spouse employer has no cafe plan. Can this be done and if so what are the risks? THANKS!

[SLuskin]

I take it that the employee is not also an owner, and that the employer is paying 100% of the premium for the employee, and that spouse is on the same policy as the employee. I don't see a problem with that at all. In fact, it looks like that employer really values that particular employee to set up a plan just for her/him.

[WDIK]

and that spouse is on the same policy as the employee.

I did not get the same impression from reading the post. Perhaps some clarification from AshleyL would be appropriate.

[sloble@crowleyfleck.com]

Thank you--I don't think I gave enough info. Please consider the following:

The sole Employee (Joe) is employed by XYZ corp. Joe is not an owner.

Joe's spouse is employed by ABC Corp. ABC Corp. maintains the applicable health plan. Joe is covered under the same health insurance policy as spouse. ABC Corp does not have a cafeteria plan.

ABC Corp pays $200 of the $500 family premium, so $300 is left for Joe and spouse.

XYZ wants to set up a POP so that Joe can pay the $300 pre-tax. XYZ would not be paying any of the premium.

THANKS FOR YOUR HELP!

[Guest Hedwig]

Did AshleyL ever find the answer to this question? We have a similar situation where the employee wants to reduce her pay under a POP for premium payments to a health plan covering the employee but not sponsored by the employer sponsoring the POP. The employer is willing to pay the premium if the salary is reduced for this purpose. Is that permissible? Thanks.

[GBurns]

Without really looking at the regs, my initial reaction is no.

Who would remit the premium and would the insurance company accept that premium paid by someone other than the sponsoring employee?

If Joe does a POP pre-tax salary reduction the amount would appear on the payroll of his employer XYZ Corp as a "Health Insurance Payable" (or similar name). XYZ would them send a check to Insurance Company. Insurance Company has no policy or relationship and even if the Group # is put on the check, cjances are they would not accept the payment.

On the other side Insurance Company has billed ABC Corp for the month's premium for all employees covered which includes Joe's spouse. ABC Corp remits an amount to Insurance Company which is less the $300. What will Insurance Company do? If Joe's spouse's name is on the list, they might say that there is a non-payment of the premium. Insurance Company could also say that Joe's spouse is cancelled for non-payment.

If either XYZ or ABC Corp has under 50 employees and in a state that prohibits list billing of employers under Small Group Health Insurance Law, the problem might even be further restrictive.

The big problem is acceptance of payment from a third party by the Insurance Company.

All this is even if section 125 allows the POP in this way, anyhow. The simplest thing is for ABC to put in a POP.