Pre or Post Tax Premiums for Dependents

[oriecat]

Many states are mandating coverage for dependents at older ages, or plans are making the changes on their own. How are you supposed to handle the premiums when you might have some dependents that qualify under IRS rules and some that don't?

For example:

EE elects coverage for Self & a qualifying child. Let's say the premium is $300 a month. This is paid pretax. At open enrollment, they add another child to the plan. This child does not qualify under IRS rules, but does under other rules. Premium is still $300, because it's one price regardless of the number of dependents. Can you still pretax the whole $300, or does part of it now need to become after tax?

(Note, no ER contribution to the dependent coverage, so we don't need to get into imputed income.)

Thanks for any thoughts.

[J Simmons]

See discussion here

[jstorch]

Recent IRS guidance on calculating the COBRA premium subsidy says you allocate premium costs first to assistance eligible individuals, so that if the cost of covering a non-assistance eligible individual does not add to the cost of covering the assistance eligible individuals, you effectively can ignore the fact that a non-assistance eligible individual is covered. See Q&A 25 of Notice 2009-27 at http://www.irs.gov/pub/irs-drop/n-09-27.pdf

I've been wondering whether this indicates the IRS will apply the same logic to other situations to determine the value of the taxable portion of health coverage, such as the one you discuss or domestic partners. Anyone have any thoughts on this?