<<For several years, amounts were taken out of his W-2 pay pre-income >>

<< I questioned the use of a 1099 NEC and was told by the benefits company the reason it was put on the 1099 NEC was because the amount is subject to both income tax and Medicare tax but NOT Social Security tax >

Sounds like they were trying to offer a cafe 125 plan and screwed it up.  Whatever the problem a  doubt a 1099-NEC is the solution. 

I agree w/ Rick that this is on the ER not the EE.  If this is there solution then the ER should be res[ponsible for the additional tax (especially if it's a public entity).