pre-tax insurance deductions

sandra_d

Like many employers, we offer employees the ability to pay for their part of insurance premiums on a pre-tax basis. I recently read an article which, I believe, stated that if insurance deductions were the only pre-tax benefits an employee elects, a "negative election" was permissable - in other words, we could just do the deductions pre-tax without having the employee enroll/sign up for it, and if they didn't want to participate, they could sign something to opt-out of the pre-tax insurance deductions. Now I am trying to find that article and can't, so am wondering if anyone knows whether or not this is a legal practice, or if in fact we are required to get employee requests/signatures first...??? Any help is appreciated! Thanks!!

NaeNae55

I can't give you a place to look for this, but it came up when we changed carriers last year. We have flex plans for premiums, medical reimbursement, and dependent care. We rewrote our plan documents and SPD's when we made the change, and one of the items we discussed was forcing employees to participate in the premium plan. Our new carrier quoted IRS regs and it became clear that we can require our employees to participate in the premium plan as long as we accept negative elections. That is, if an employee doesn't want to participate, they must tell us in writing during our open enrollment period (when the health plan, etc is elected); otherwise they are in the plan. Unfortunately, I cannot locate my documentation so I can't send it to you. All I can do is reinforce your thoughts on the matter. Sorry I couldn't be of more help.

Good luck!