Cafeteria Plans

[VG123]

Work with a small business that has 3 employees. No health benefits are offered to any employee. Can the employer set up a cafeteria plan that will deduct medical and dental premiums pretax for policies that employees have acquired personally and pay for personally?

[Chaz]

Under the Affordable Care Act, a cafeteria plan cannot be used to pay premiums for individual policies providing major medical coverage. It is possible to permit payment of premiums for individual dental policies but it raises COBRA and ERISA issues for which you should speak to counsel or at least your insurance broker before doing so.