Employee only funded Insurance Premiums

[Guest dcarlin]

My question is can an Employer deduct funds from there employees paychecks on a pretaxed basis to pay for Employee only funded Insurance Premiums.

How would you run this through a section 125 plan?

what is the best way to handle this?

[Mary C]

You don't really give much information, but the answer is yes, the employer can deduct required cost of employee pay all benefits on a pre-tax basis.

[Guest dcarlin]

the company has an Individually owned Insurance policy that they would like to run through on a pre-taxed basis. This would not be considered POP would it? Doesn't the employer have to contribute something for it to be a group policy and ran through as POP? I was thinking they could do it on a reimb. type plan, but the employer has it set up that he deducts the amounts from there payroll and pays the premiums himself from the deductions.

[papogi]

See Revenue Ruling 61-146:

http://www.irs.gov/pub/irs-drop/rr-61-146.pdf

[Don Levit]

That revenue ruling will discuss the employer refunding the employee for making after-tax payments to the insurance company, all on a non taxable basis for the employee.

If you wish to simply provide a payroll deduction for the employees, you can do so according to 29 C.F.R. Section 2510.3-1 (j).

A case you may want to refer to can be found at http://pacer.ca4.uscourts.gov/opinion.pdf/042370.U.pdf.

Refer to p.5-6.

Don Levit