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mal

Multiemployer Health Plans

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A multiemployer group health plan with several participating unions is interested in converting their existing "dollar bank" into an HRA/HSA type account that could be used to pay health premiums, out of pocket expenses, etc. For those who are not familiar, a union construction worker will have a set amount of money paid to a health fund for each hour he works. The plan in question puts the contributions into a "dollar bank"--a hypothetical account balance from which deductions are made in the amount of the monthly premium.

One question that has arisen about the conversion/establishment of an HRA/HSA is that many of these members already have similar accounts through their local unions. Is there any legal prohibition against an employee having two or more HSA/HRA accounts established in his name?

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Shouldn't the CBA, the VEBA and the Health Plan PD etc already state what the money must be used for? If they do not, can such a change as you propose be done without renegotiating and amending the CBA etc?

I would have thought that at least a portion of the money that the employer contributes would already have been allocated towards specific health insurance coverage that the union plan would already have in place, so I wonder what these other insurance premiums that would flow from the HRA/HSA would be for.

The money in the "dollar bank" already has some being used for premiums so all that is left for coverage the is out of pocket medical expenses. Why not use a standard section 105 Medical Expense Reimbursement Plan to cover these out of pocket expenses? Don't you already have this in place? What you describe seems no different from Benefits Credits in other employee benefits programs.

Have you compared what you want with the plan described in PLR 200007021?

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Mal:

You posted this under two or more VEBAs, so are you asking if a plan can have more than one VEBA associated with it?

In regards to this dollar bank, VEBAs cannot have individual accounts for participants to access.

Were you suggesting this be done?

Don Levit

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To clarify...

The CBA only specifies what the contribution rate will be for the Plan. It does not govern or require any specific type of benefit. This is established solely by the joint board of trustees.

The plan in question is self funded. There is no true "premium" that is being paid by the plan.

The HRA/HSA accounts would not be under the same trust. Many Local Unions that participate in the health plan also maintain a "supplemental" plan. The supplemental plans are jointly trusteed and tend to provide benefits akin to a VEBA...retiree healthcare subsidies, out of pocket expense reimbursement, etc. The converted dollar bank would be maintained by a wholly separate trust.

With respect to the individual balances, there is no vesting under the current dollar bank arrangement. Each person has a hypothetical account balance, but cannot use the money for anything other than health premiums.

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mal:

Thanks for providing more details.

I am not sure if this helps, but there is a special rule which provides that welfare benefit funds under CBAs have no account limits. IRC Sec. 419A(f)(5)(A); Temp. Treas. Reg. 1.419A-2T, A-2.

Don Levit

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