We have an active employee with dependent coverage for medical and dental. His dependent will be offered COBRA shortly. The employee wants to have the dependents premiums deducted from his paycheck on a pre-tax basis. Can this be done?

Does the plan document allow for a mid-year change of election for a qualifying COBRA event? If so, then I would say this is should be premitted.

The employee can pre-tax the COBRA payments for the dependents on COBRA as long as the dependents (while no longer eligible under the group health plan) are still dependents according to the IRS Section 152 rules. Pre-tax deductions are generally not allowed for individuals who are not dependents under tax code.

Thank you