Can my VA employer pay for individual health insurance?
The tax-free advantage comes from your employer setting aside part of your wages (pre-tax) into what is called a “cafeteria plan” or “Section 125 plan.” These are pretty cheap for companies to start, and routing enough of your wages through that to pay for your premiums–even if the company itself doesn’t contribute a dime to your coverage–ends up to be a pretty good deal for both you and your employer. You save from 15-35% on the cost of your premiums (depending on your marginal tax rate) and your employer also saves around 7-10% of the cost of your wages, because they don’t have to pay payroll taxes on any of the money that you use to buy health insurance. It’s a pretty sweet deal on both sides. However, it’s a somewhat murky area of health law what the legal implications are if you pay for an individual policy (that is, in the nongroup market) using a Section 125 plan. As I understand it–and I’m not a healthcare lawyer, although I’ve heard some speak about this issue, so this ain’
