125 Plans and Cobra

[Guest dln1151]

Due to the final COBRA regulations released May 26, 2004, is it necessary to amend all Cafeteria Plans, including Premium Only Plans?

[GBurns]

It depends.

COBRA applies to the underlying benefits not to the Cafeteria Plan per se. Each of the underlying plans, if subject to COBRA, must be amended as necessary. If however, they are covered under 1 of these Wrap documents, then that document has to be amended as necessary.

[Guest dln1151]

What do you mean by a Wrap document?

[GBurns]

It is a document that tries to cover the cafeteria plan and the underlying qualified benefits, in a single document, instead of having a separate PD for each. Remember a cafeteria plan is only a means of preventing constructive receipt by allowing the employee's salary reduction to be treated as an employer contribution. A cafeteria plan is not the plan that provides the health or other benefits.

You might want to search these Forums for previous discussions.

[sloble@crowleyfleck.com]

You wouldn't have to amend a premium only plan for COBRA, but if the 125 plan has a health flexible spending account then it has to be amended because the health FSA is a group health plan subject to COBRA.