In light of the change in the tax treatment, can we allow employees to pay for the coverage provided to children under age 26 whose coverage is no longer includible in income on a pre-tax basis?
A711. Yes. You may let employees pay for coverage of these children on a pre-tax basis as of March 30, 2010 even if not permitted under the current language in your cafeteria plan document. However, the IRS requires that the cafeteria plan be amended retroactively to the first date employees are allowed to make these contributions (no earlier than March 30, 2010) no later than December 31, 2010.
Related Questions
- Will coverage provided to children who do not qualify as the employees tax dependent be taxable income to the employee (similar to how we currently handle domestic partners)?
- How does the play or pay mandate work if we offer coverage but employees prefer coverage through the Exchange?
- How will sick pay coverage be provided under the new IIP?
