BASE® Excepted Benefits 125

FAQ

Frequently Asked Questions about the BASE® Excepted Benefits 125

Can an employer pay a portion of an employee’s individually owned excepted benefits?
No, an employer cannot pay a portion of an employee’s individually owned excepted benefit under a 125 Cafeteria Plan. The employee retains the responsibility for paying for their supplemental coverage, but they will be reimbursed for their coverage once the expense has been adjudicated. Essentially this allows employees to obtain their own excepted benefit coverage and have the option to pay for it on a pre-tax basis through payroll.

Why do employees have to show proof of payment every month?
Employees must provide monthly proof of payment to ensure that they meet the following requirements to be eligible for the Employee Paid Excepted Benefits plan:

  • The policy must be an individual plan and cannot be part of an employer-sponsored benefit plan.
  • It is recommended that the employee participating in the Employee Paid Excepted Benefits plan be named as the policyholder
  • The policy must be paid for by direct payments from the employee who owns the policy.