Spousal Exclusion Policy

[Guest moseelig]

An employer has a policy whereby it offers employees $250 to have their working spouse "opt out" of employer sponsored medical coverage. Does this policy need to be included in the Cafeteria Plan Document?

[Chaz]

Yes. The opt-out provides the opportunity to choose between a taxable benefit (cash) and a non-taxable benefit (spousal coverage), hence the need for a cafeteria plan. The material terms of a cafeteria plan need to be in writing and the opt-out is likely a material term.