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Yeah good point. While what happens in practice is probably more important, I agree that rebates should be mentioned in the SPD (or some other material provided upon entry) to meet that disclosure condition of the small filer exemption. Since all plans should have a wrap SPD, that's the logical place to address it. But I also think that provision can be something relatively generic. Here's how our client wrap SPD template handles: Under ERISA, the Plan Administrator of the group health plan may have fiduciary responsibilities regarding distribution of dividends, demutualization and use of the Medical Loss Ratio rebates from group health insurers. Some or all of any rebate may be an asset of the plan, which must be used for the benefit of the participants covered by the policy. Participants should contact the Plan Administrator directly for information on how the rebate will be used.

So what you're really saying, I think, is that they are vested, unless the prohibition on working currently (i.e., while employed for the first employer) for a second competing employer is enough to prevent vesting, which is a determination based on facts and circumstances, but seems doubtful. Under 457(f) proposed regs, if the benefit is payable within the short-term deferral period, actually or constructively, it becomes subject to IRC 409A. So if it takes longer than 2-1/2 months after the end of the year in which vested (see above as to substantial questions regarding when vested), you might want to include on W-2 so that "constructively" received. Frankly, I found the proposed regs somewhat confusing on the point of "constructive payment."

Just my opinion, you should NOT be posting your personal information on this public site.

Interesting situation and position. My thoughts are: State insurance laws generally don't apply outside of the state where policy is sitused, so the FL age 30 mandate and the state mini-COBRA rules won't apply to B's plan. The COBRA M&A rules still require on of the statutorily prescribed triggering events to cause loss of coverage to form a COBRA qualifying event. Those rules specifically state that an employee retained by the buyer doesn't experience a QE upon the transaction even if the employee/dependent lost coverage (because there's no triggering event where no termination of employment). I think one argument could be that they would've have a 36-month QE for the children upon aging out of B's plan if they had been in it upon reaching age 26, but in this case that option doesn't appear to be available. Your argument appears to be that the children effectively had the triggering event the instant the COBRA rules sprang coverage responsibility to B, because at that point they lost dependent status. But again, since they never were actually in dependent status with B I don't think that works. I think the best analogy would be to assume the transaction never happened and S amended its plan to remove the age 30 dependent provision and bring it to the standard age 26 provision. Good arguments on both sides as to whether that's a COBRA QE. Ultimately, if you could get the carrier (or stop-loss) to agree that it's a QE, I would assume it is a QE and proceed accordingly regardless of these technical considerations. Otherwise, I think you're stuck between a rock and a hard place and will have to direct the dependents to the exchange. Treas. Reg. §54.4980B-9, Q/A-5: Q-. 5. In the case of a stock sale, is the sale a qualifying event with respect to a covered employee who is employed by the acquired organization before the sale and who continues to be employed by the acquired organization after the sale, or with respect to the spouse or dependent children of such a covered employee? A- 5. No. A covered employee who continues to be employed by the acquired organization after the sale does not experience a termination of employment as a result of the sale. Accordingly, the sale is not a qualifying event with respect to the covered employee, or with respect to the covered employee's spouse or dependent children, regardless of whether they are provided with group health coverage after the sale, and neither the covered employee, nor the covered employee's spouse or dependent children, become qualified beneficiaries as a result of the sale.