COBRA premiums

[Guest jim williams]

Can a participant of a Sec. 125 plan that offers health insurance premiums as a nontaxable benefit, include COBRA payments withheld from the participant's pay for premiums on behalf of a dependent who was dropped from the employer's plan as a result of no longer being a full-time college student?

[sloble@crowleyfleck.com]

Yes, if the plan allows pre-tax payment of COBRA premiums and a corresponding election change, so long as the child continues to be a "dependent" under Code 152.

TR 1.125-4c3(iv) Exception for COBRA. --If the employee, spouse, or dependent becomes eligible for continuation coverage under the group health plan of the employee's employer as provided in section 4980B or any similar state law, a cafeteria plan may permit the employee to elect to increase payments under the employer's cafeteria plan in order to pay for the continuation coverage.