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Covered California Q&A

Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.

Pre- Tax Benefits through the SHOP

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Question: Will the SHOP allow a Pre Tax Benefit (sec 125) for share of cost on coverage? I believe the answer is no for Individual but interested in SHOP. Thanks

Answer: Yes. Section 125, Premium Only Plans (POP) still facilitate the pre-tax benefits for the employee’s share of the premium in the SHOP. In addition, POP plans can facilitate the pre-tax purchase of individual health insurance “off” the exchange. And POP plans can also facilitate the pre-tax payment of an employee’s share of premiums for large employers that purchase group coverage “off” the Exchange. The new Code section 125(f)(3) is intended to prevent employers from using cafeteria plans to allow employees to make pre-tax purchases of individual health insurance coverage from an Individual Exchange.

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Am I understanding this correctly? An employee can’t use a POP plan for coverage on the individual exchange but an individual can use a POP plan for individual coverage off-exchange? An individual can have his own POP plan?

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