If you currently deduct from your employees’ pay, a portion of their qualified health insurance premiums and are doing so on a pre-tax basis, the following questions are relevant.

1. Do you have a written plan document in your files?
Yes q No q

2. Have you properly amended your plan to reflect any changes you have made to the plan year, eligibility requirements, benefits or IRS Regulations?
Yes q No q

3. Have your employees received a copy of the current Summary Plan Description?
Yes q No q

4. Is the total of all benefits for key employees in the plan no more than 25% of all benefits in the plan?
Yes q No q

5. Do you have current signed election/enrollment forms on file for all eligible employees?
Yes q No q

6. Do you require all election changes to be made during the open enrollment period each year unless the employee has experienced a valid change in status as outlined in the latest Section 125 regulations?
Yes q No q

7. As your new employees become eligible for participation in the plan, do you require they complete election/enrollment forms?
Yes q No q

8. Do you have documentation on file to support annual nondiscrimination requirements?
Yes q No q

If you answered “no” to any of these questions, you may want to examine the plan. There are penalties for non-compliance. The severity of the penalties will depend on the severity of the infractions. This checklist is not meant to provide legal advice or counsel… but rather a guideline to determine the potential need for adjustment or correction.

Please contact us for more information. Use the words Section 125 in the Message Box.