S-corp owner participation

[Guest ChristineW]

We have a 100% S-corp owner who wants to buy insurance from his company's Cafeteria Plan. We know he's ineligible to do this on a pre-tax basis. Is it permissible for him to do this as long as we treat it as an after-tax deduction?

[Locust]

Cafeteria plans can't cover the self-employed, and an S corp shareholder (2% or more?) is treated as self-employed. I don't see why the owner couldn't pay for the insurance on an after-tax basis outside of the cafeteria plan - it would just be a matter of drafting to make it clear that the owner was not part of the cafeteria plan. To put it another way, the owner can be part of the health insurance plan (on an after-tax basis), but not part of the cafeteria plan.

[Guest b2kates]

from a plan design standpoint I agree.