Non-Taxable Contributions Cannot Be Used in the Individual Marketplace

You Cannot Use Section 105 Plans and Other Reimbursement Arrangements to Purchase an Individual Plan on a Tax-preferred Basis¹
By Christopher E. Condeluci, Esq. Of Counsel, Venable LLP Washington, DC

Let’s cut to the chase: An employee cannot purchase an insurance policy sold in the individual health insurance market (i.e., an “individual market plan”) with non-taxable contributions. Period. Exclamation point. Tis includes payments from an employer to reimburse the premiums paid by an employee for an individual-market plan under a Section 105 Medical Reimbursement Plan, a Revenue Ruling 61-146 arrangement, or any other arrangement where employer dollars are being used for such reimbursements. Tis also includes the purchase of an individual-market plan with employee pretax contributions made through a Section 125 cafeteria plan.

Read More»

¹Article as listed in the March 2014 of the Health Insurance Underwriter (HIU) Magazine by National Association of Health Underwriters (NAHU)


The information provided herein is intended solely for the use of our clients. You may not display, reproduce, copy, modify, license, sell or disseminate in any manner any information included herein, without the express permission of the Publisher or Publishers of articles within.

The information provided is for informational purposes only and does not constitute legal advice. The information above contains only a summary of the applicable legal provisions and does not purport to cover every aspect of any particular law, regulation or requirement. Depending on the specific facts of any situation, there may be additional or different requirements. This is to be used only as a guide and not as a definitive description of your compliance obligations.