In recent years, with rising medical costs, and without full deductibility for health and accident plan costs by self-employed individuals, some taxpayers have been encouraged by plan promoters to establish so-called “Section 105” plans with the self-employed individual’s spouse hired as an employee. Numerous questions have been raised about the plans including whether expenses incurred before a plan’s adoption are excludible from the gross income of the employee. The Internal Revenue Service has recently provided additional guidance on such plans in two Coordinated Issue Papers under the Industry Specialization Program.