Voluntary Benefits – Compliance and Tax Considerations

More and more employers are choosing to include “voluntary benefits” in the benefit package offered to eligible employees. Voluntary benefits may include coverage for a variety of things including, but not limited to, dental, vision, life, disability, specific disease, or accidents. It is common that such benefits will be 100% employee-paid. Are such benefits subject to compliance requirements such as ERISA and COBRA? Are there any tax considerations? Although many employers assume there are no additional compliance obligations for these types of benefits, especially when the employer is not contributing, that is not always the case. In addition, tax rules may affect the ability to pay for premiums on a tax-favored basis, and in some cases affect the taxation of benefits received. These are things the employer should understand when choosing to offer such benefits. Below is a high-level summary of these considerations.

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