Here is a great summary of the law on this matter from Christopher Condeluci at Venable LLP posted at the Inst. for Healthcare Consumerism. Thanks to Ryan Kennedy for the pointer.
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.
This 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. This also includes the purchase of an individual market plan with employee pre-tax contributions made through a Section 125 cafeteria plan. ...
Because an arrangement under which an employer reimburses an employee’s substantiated premiums for health insurance (e.g., a Section 105 Medical Reimbursement Plan or a Revenue Ruling 61-146 arrangement) would be considered a “group health plan” under the Internal Revenue Code (“Code”). ...The entire post is definitely worth reading.
