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"voluntary insurance arrangements" are not ERISA plans.


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Employer invites a local insurance agent to his business to sell his employees "supplemental policies" (such as accident, short-term disability, cancer policy, and life). Employer will pay none of the premiums. Employees will pay all the premium via payroll withholding. The employer's only involvement is witholding the monthly premims from employees' paychecks "PRE-TAX" and then mailing the premium to the insurance company.

MY QUESTION:

Are these ERISA plans ?

Doesn't the "pre-tax" aspect (as opposed to after-tax) make these plans ... ERISA plans (even though the employer's involvement is very limited) ?

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If he incorporates this into his 125 Plan, which I would assume that he would have to do to make them pre-tax, then it sounds like it would have the indicia of corporate sponsorship to make it an ERISA plan (even though the 125 itself may not be an ERISA plan).

I think there are some prior threads regarding DOL's Advisory Opinions with regard to this question.

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I believe when the employer allowed the agent in to offer a product to be paid through the employer's payroll, the employer has sponsored that plan. Any life insurance of over 50,000 provided would be taxable to the employee if it were paid for a a part of a 125 plan with pre-tax dollars.

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  • 2 weeks later...

First you describe an employer permitting an agent to solicit plans that would clearly qualify as "voluntary benefits" (after-tax and non-ERISA). Then you describe them as "pre-tax". Which is it?

The only way to reconcile the information you provided is to assume that the agent was soliciting participation in insurance contracts pursuant to a 125 plan. As such, it would normally be an ERISA plan. K Johnson is correct, above.

But what is the point of the question? Are you trying to decide whether to go to Federal or state court? Are you waiting for an SPD that complies with DOL Regs? Or are you trying to figure out whether you should be able to get an answer to a question in writing within 30 days?

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I said "probably" because the facts were not complete enough to know whether or not this was a POP or a full flex. (Most of the 125 plans I see are flex plans.)

Are you implying that the premium reduction portions of a full flex plan are exempt from ERISA?

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