Is an after-tax option required for payment of medical/dental premiums?

Offering employees the ability to pay for their share of health premiums on an after-tax basis is administratively burdensome, and it would be advantageous to eliminate it. Doing so of course raises several issues, the most immediate ones I can think of:

1. Can a benefits wrap plan that incudes section 125 limit the payment of medical and dental to pretax only so long as the plan otherwise offers participants a choice between taxable and nontaxable on some other benefit(s), such as disability premium payments?

2. Other than the possibility that some employees might benefit from an income tax deduction on their premium payments if paid on an after-tax basis, are there any other potential benefits to employees by making after-tax benefits available?

3. Can this be eliminated mid-year or is it better to have it take effect the following year?

4. What other issues might be lurking for the unwary?

Thanks in advance for any insights!

The IRS guidance here provides that employers can have mandatory cafeteria plan pre-tax contributions for employees who elect the underlying benefit components.  I've copied that below. 

The choice between taxable cash and the qualified benefit is the choice between waiving the underlying plan (not paying the employee-share of the premium, and therefore receiving standard taxable cash) and electing the underlying plan (enrolling in medical, dental, vision, etc. and the corresponding election to pay the employee-share of the premium on a pre-tax basis).

Pre-tax is basically better in every sense for both employer/employee.  If you're looking for a reason in theory an employee might prefer after-tax, it could be to try to increase FICA contributions for a higher Social Security benefit.  Or maybe they didn't want to be bound to the election for the entire plan year absent a permitted election change event.  But basically everyone is going to prefer pre-tax.

If you have employees actually choosing the after-tax option, I wouldn't try changing the approach here mid-year.  Employees need to make their election knowing that it will be pre-tax through the cafeteria plan, and it's not clear to me you could have a mid-year  "mini-OE" to facilitate that based on this cafeteria plan design change. 

Prop. Treas. Reg. §1.125-1(r):

(1) Salary reduction-in general. The term employer contributions means amounts that are not currently available (after taking section 125 into account) to the employee but are specified in the cafeteria plan as amounts that an employee may use for the purpose of electing benefits through the plan. A plan may provide that employer contributions may be made, in whole or in part, pursuant to employees' elections to reduce their compensation or to forgo increases in compensation and to have such amounts contributed, as employer contributions, by the employer on their behalf. See also §1.125-5 (flexible spending arrangements). Also, a cafeteria plan is permitted to require employees to elect to pay the employees' share of any qualified benefit through salary reduction and not with after-tax employee contributions. A cafeteria plan is also permitted to pay reasonable cafeteria plan administrative fees through salary reduction amounts, and these salary reduction amounts are excludible from an employee's gross income.

Thank you Brian!