Missouri’s Cafeteria Plan Mandate: Effective January 1, 2008

As part of the “Missouri Health Insurance Portability and Accountability Act” (§§ 376.350 to 376.454), Missouri passed new legislation joining other states in requiring certain employers to establish cafeteria plans, meeting Section 125 of the Internal Revenue Code.

All cafeteria plans let employees pay for health coverage with pre-tax dollars, which effectively lowers the cost of coverage and may make it more affordable for employees.

Missouri House Bill 818 (new Missouri Revised Statute § 376.453) applies to employers who provide and contribute to insured health coverage. The law, however, does not apply to employers who offer health insurance through any self-insured or self-funded group health benefit plan. No penalty for non-compliance has been described in the law. Thus, any other employer providing insured health coverage, and pays any portion of the premium, must now establish a premium-only section 125 plan.

Unfortunately, state regulators have not issued any guidance yet, and the law is fairly ambiguous. There are open questions as to the size of employer affected, the application of the law to employers that are headquartered outside of Missouri, and to employers that provide both insured and self-insured plans.

Employers are cautioned to watch for State regulations and communications from their insurance carriers.

A second provision in the Missouri law, which is also unclear, permits small employers (without specifically defining “small employer”) to contribute through a cafeteria plan to the individually underwritten health benefit plan of an employee who is eligible for coverage under the employer’s plan.

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