Subject: B'Link Nwsltr 1 of 2 - 1/5/96
NEW REGULATIONS UNDER 125
New on BenefitsLink -- the full text of the recent IRS regulations
addressing the effect of the Family and Medical Leave Act on cafeteria
plans (under section 125 of the Code, also called flexible benefit plans).
The regulations were printed in the Federal Register of December 20.
Included on BenefitsLink is the full "preamble" from that release,
providing helpful background information about the new rules.
Included in the BenefitsLink copy of the release are hypertext jumps to
the relevant IRC statutes and DOL regulations cited in the release.
The release is published at
http://www.magicnet.net/benefits/taxregs/1.125-3.html
The following questions are answered in the regulations:
Q-1: May an employee taking FMLA leave revoke an existing election of
group health plan coverage under a cafeteria plan?
Q-2: Who is responsible for making premium payments under a cafeteria
plan when an employee on FMLA leave continues group health plan coverage?
Q-3: What payment options are required or permitted to be offered under
a cafeteria plan to an employee who continues group health plan coverage
(including a health FSA) while on unpaid FMLA leave, and what is the tax
treatment of these payments?
Q-4: Do the special FMLA requirements concerning an employee who
continues group health plan coverage under a cafeteria plan apply if the
employee is on paid FMLA leave?
Q-5: What restrictions apply to contributions when an employee's FMLA
leave spans two cafeteria plan years?
Q-6: Are there special rules concerning employees taking FMLA leave who
participate in health FSAs offered under a cafeteria plan?
Q-7: Are employees entitled to non-health benefits while taking FMLA
leave?
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Best regards,
Dave Baker