No cafeteria plan reimbursement of individual health insurance premiums

[Flyboyjohn]

Can anybody point me to the citation for this rule?

Client wants "proof" that they can't do this

Thanks

[leevena]

Some times you can use the 125, sometimes you cannot.

See Public Law 111-48, Section 1515©, which amended Section 125. Long story short, if you purchase an individual plan via the puplic exchange then that plan is no longer considered a qualified benefit under Section 125. If you purchase the individual plan off the public exchange, then you can use the 125 pre-tax dollars.

[Flyboyjohn]

My understanding is/was that even pre ACA a typical cafeteria plan flexible spending account cannot reimburse an employee's "personal" health insurance premiums and the only way to accomplish that was through an HRA, am I wrong?

[leevena]

My understanding is/was that even pre ACA a typical cafeteria plan flexible spending account cannot reimburse an employee's "personal" health insurance premiums and the only way to accomplish that was through an HRA, am I wrong?

I believe so.

[KJohnson]

No you could do it through a 125 plan from a tax standpoint--but not through the FSA. You would have a separate premium reimbursment feature. Where you got into trouble are with things like HIPAA discrimination, COBRA, state small group rules etc. where the individual policy might then be considered employer sponsored and wouldn't comply with the varous mandates. Of course after ACA you can't do individual Exchange policies through a 125 plan.

[GBurns]

And if this is a small group/employer, then state insurance laws and the individual policy terms most likely will restrict.