Advantages of pre-tax premium payments vs. post-tax preium payments.

[Guest LEP]

What changes in health insurance coverage (i.e. drop coverage, drop dependents etc...)can an employee paying for health premiums with after-tax dollars make as opposed to an employee paying for premiums with pre-tax dollars, outside the open enrollment period?

[Joe Priselac]

If there is no Section 125 plan in place,the only rules would be those of the insurance company or employer if it is self-insured. Practically speaking there would probably be little difference. Most companies allow changes for family status changes like marriage, divorce, birth, death, etc. similar to the status changes allowed under Section 125. If a company offers multiple medical plans, there is a once per year open enrollment window to switch insurance options.

[KIP KRAUS]

The only other thing I would add to Joe’s comments is that when section 125 premiums are not in effect an insurer or employer will allow an employee to cancel medical/dental coverage ant any time they wish regardless of a family status change. However, if they do, they usually cannot get back into the plan until open enrollment regardless of a family change.