Wednesday, February 18, 2009

New Cafeteria Plan Rule

New federal regulations regarding cafeteria benefit plans are likely to be published within the next 30 to 60 days, according to the U.S. Department of Treasury. The new regulations show the information that the IRS (Internal Revenue Service) has issued formally or informally over the past 20 years.

The controversial non-discrimination clause in the regulations will not be finalized until President Barack Obama takes office. There is also one change in the cafeteria benefits plan that it will allow employers to add COBRA benefits to the options available, which is typically used by employees who become old enough for Medicare.

The new cafeteria plan regulates that an employee who changes jobs can even be reimbursed by the new plan for COBRA coverage under the old employer’s insurance policy. The COBRA premium is covered, because it is a valid healthcare expense, and the employee paid it during the appropriate year. The latest regulations may not go into effect until January 1, 2010.

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