125 Benefits Offered

[Emichele0319]

Very new here and need clarification: for a plan to fully qualify under 125 must an employer offer an alternative to taking the employer sponsored health plan(s)? Example: Employer requires all F/T employees (no exceptions for F/T employees) to participate in sponsored health care plan(s) (employer/employee share plan cost). I'm confused on whether there has to be an alternate choice for the employee (there are different plan choices - Kaiser/Blue Shield/Etc.) such as pay into health plan OR cash-in-lieu/some other taxable benefit? Thank you for any help! 

[QDROphile]

The essence of section 125 is a choice between a taxable benefit (cash compensation) and a nontaxable benefit (e.g. health coverage).  If there are different coverage choices, they probably have different employee premium requirements.  To the extent that a difference in the premium amounts may be reflected in the paycheck (taxable cash), there is some room for section 125 to operate, even in a mandatory coverage/payment arrangement, but you would not be looking at a traditional section 125 arrangement.

[leevena]

4 hours ago, Emichele0319 said:

Very new here and need clarification: for a plan to fully qualify under 125 must an employer offer an alternative to taking the employer sponsored health plan(s)? Example: Employer requires all F/T employees (no exceptions for F/T employees) to participate in sponsored health care plan(s) (employer/employee share plan cost). I'm confused on whether there has to be an alternate choice for the employee (there are different plan choices - Kaiser/Blue Shield/Etc.) such as pay into health plan OR cash-in-lieu/some other taxable benefit? Thank you for any help! 

An employer does not need to offer more than a single group health plan.  Does this answer your question?

[Luke Bailey]

On ‎2‎/‎2‎/‎2020 at 12:57 PM, Emichele0319 said:

Very new here and need clarification: for a plan to fully qualify under 125 must an employer offer an alternative to taking the employer sponsored health plan(s)? Example: Employer requires all F/T employees (no exceptions for F/T employees) to participate in sponsored health care plan(s) (employer/employee share plan cost). I'm confused on whether there has to be an alternate choice for the employee (there are different plan choices - Kaiser/Blue Shield/Etc.) such as pay into health plan OR cash-in-lieu/some other taxable benefit? Thank you for any help! 

Emichele0319, agree with leevena, but will add that if the employer is not requiring the employees to pay all or part of the premium, there is no need for a 125 plan, because there is no choice between cash and nontaxable benefits. If the employer requires the employee to pay part of the premium, but does not give them a choice, I would want to know exactly how that operates before commenting further. I have not seen that and it has issues, I think.