Long-term care insurance and cafeteria plans

[Ken Davis]

Hoping someone can shed some light on this. Code section 125(d)(1)(B)

states within the definition of a cafeteria plan that the plan benefits

are limited to cash and qualified benefits. Section 125(f) states that

LTC insurance is not a qualified benefit. Flexible spending arrangements

are a variation of cafeteria plans. Section 106©(1) states that an

employee has gross income if an employer provides LTC coverage through an

FSA.

So, a cafeteria plan in the form of an FSA may not offer LTC coverage and

remain qualifed, but, if it does, the employee has income. What's going

on here? Obviously, I'm missing something.

Thanks and I hope everyone has a safe and happy Thanksgiving with their

family and friends.

Ken Davis

Univ. of South Alabama