This article examines the use of "Section 125" cafeteria plans offered by employers to shelter individual health insurance premiums from income tax. Little is known about the availability and use of these plans, particularly for employees who are not offered employer-based health insurance.
The authors conducted 65 semi-structured, open-ended interviews with insurers, insurance agents, government officials, and administration firms in Indiana, Massachusetts and Missouri. The results were coded and analyzed.
While Section 125 cafeteria plans have potential to help individuals by sheltering individual health insurance premiums from income tax, currently these plans are rarely offered to employees.
This article appears in a special issue of the journal HSR: Health Services Research. The study was carried out through the Robert Wood Johnson Foundation’s State Health Access Reform Evaluation (SHARE). SHARE guides the implementation of health reform and supports research on the expansion of health insurance coverage.