Q&A: Administrators: Compliance
« BackQuestion: Can an employee pre-tax the COBRA premium for a child who ceases to be a dependent?
Answer:
A plan may permit an employee to purchase COBRA on a pre-tax basis for a child who has exceeded the medical plan's age limit, is dropped from coverage and is offered COBRA, as long as the child continues to qualify as a tax dependent under Code Section 152.
For example, a child may get dropped from the health plan at age 18, but remain a dependent as long as the employee provides more than 50% of the child's support.
The cafeteria plan could permit the employee to make a mid-year change to pay for the COBRA coverage (increasing salary reductions to pay for the cost).
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Some portions of an answer may reflect the specific administrative practices of our firm, and may not be universally applicable to all flexible benefit plans.
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