Pre or post tax medical premium choice?

[Guest synergy]

Must an employer offer employees the choice to pay for their medical coverage contibutions with pre or post tax dollars?

[SLuskin]

Yes. the employees must be offered the choice for 2 important reasons. The first is the possible diminution of Social Security benefits, such as they might be. The second is the inability to drop the coverage during the plan year, or add or drop family members without consistent family status changes. Even in cases of a negative election (which I do not like), the employees must be given an opportunity to opt out of the pretax plan.

[Joe Priselac]

I am assuming that the employer has a Section 125 plan in place. You can have a negative enrollment approach to POP, but you must notify employees of their right not to have insurance premiums deducted pre-tax. People sometimes don't want to participate because of their concern over reduced Social Security because of lower FICA taxes.

[Guest synergy]

Can either of you cite the section of the code where I can find that information? No matter how many times I've looked at Sect.125, I just don't see it! Thanks.

[Lisa Hand]

IRC Section 125 (d)(1) "In general - the term "cafeteria plan" means a written plan under which-(A) all participants are employees, and (B) the participants may choose among 2 or more benefits consisting of cash and qualified benefits."