Leaderboard

The usual way to reach a private pension benefit to collect or secure child support is through a domestic relations order that is recognized and determined to be a qualified domestic relations order by the pension plan when the participant is alive. It is best done at the time of divorce or establishment of the child support. Also, agencies that are responsible for overseeing child support (e.g. those that provide or administer government support for children) should be familiar with the approach, but the law is very specialized and complicated, and is often not understood or properly employed by the officials. Complexity and difficulty increase markedly when the participant dies before such an order is established. It may be too late, especially if the death beneficiary is a subsequent spouse of the participant. A description of any possible path is beyond this forum. Unfortunately, you need to find someone who is expert in these matters, including Texas domestic relations law, to assess. I am skeptical that liens can be effective, which may be why no one is pursuing them. But I am not able to comment competently about such matters.

Then why is “gateway” mentioned in the original post?

Basically, this is a situation where the participant's annual income was about $1,333 and there is a distribution fee (commonly up to $100) that is charged per payment by the service provider. Nobody "wins". The plan sponsor contributed $40, the service provider either gets only the $40 for a fee (or charges the plan sponsor for the other $60), and the participant does not get their $40 of additional vested benefit. Everybody involved should have known that there was an additional amount that would be credited to the participant at the end of the year. This is how the SHNEC works. Everybody should have known that each check issued was going to incur a fee. This should have been disclosed explicitly in the 404a-5 notice, and possibly as part of the request for distribution. I have seen plan administrators take different perspectives on how this would be handled. Some say the participant did not have to take a distribution until after the SHNEC was allocated, so the it was the participant's choice. Some say the participant paid for a distribution and the payment of the remedial amount was part of that distribution, so the plan sponsor picks up the tab. Definitely check the service agreement with the service provider(s). This service agreement may say explicitly how the distribution fee will be handled in the event the participant's account balance was insufficient to pay the fee. In this case, best practice is: what if anything the plan document may say about payment of expenses, what the plan sponsor and service provider have agreed upon, what has been standard operating procedure for the plan in other similar instances (i.e., administrative policy and procedures), and what has been clearly communicated to all parties.

Lauren0507, I do not know what your relationship is with the group. I am from the wholesale side of group health, a TPA that administers self-funded medical plans. But I found this interesting. And BTW I agree with Brian that more than likely it is a welfare plan. $2,000 per year per employee appears to be excessive for what the group/employees will receive. A physician cannot assist in refills for someone who is not their patient. So, if the concierge physician cannot assist with refills for non-patient employees, and the concierge can easily and quickly refill a script for an employee who is already a patient, what is the value? As for the high or immediate scheduling priority, maybe some value can be given to that, but certainly not $2,000 per employee per year. Just my 2 cents.

I would consider that an ERISA group health plan benefit. The payment is to medical practitioners for the purpose of accessing medical items and services. Even though the fully insured policy will cover the underlying items/services, this service is a vehicle to access them at an accelerated rate. It's along the lines of a membership fee for one of the concierge services like One Medical. I'm not aware of any definitive guidance that these types of concierge medical service fees are §213(d) medical benefits, but there's an IRS Information Letter that suggests these fees do qualify as medical expenses: https://www.irs.gov/pub/irs-wd/11-0027.pdf. In any case, employers generally treat them as such by excluding the cost from employees' taxable income (pursuant to Internal Revenue Code §105 and §106). One way you could look at it is in light of how the DOL views EAPs. Those are generally always found to be ERISA group health plans because they include services provided by trained medical professionals (in that case, mental health therapists). If it was truly limited to non-medical concierge services it would not be an ERISA plan, but that rarely is the case. As with here, the payments are being made to trained medical providers. Here's some more discussion on topic: https://www.newfront.com/blog/most-eaps-are-group-health-plans-subject-to-cobra Here's some relevant cites: ERISA §3(1): (1) The terms “employee welfare benefit plan” and “welfare plan” mean any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services, or (B) any benefit described in section 302(c) of the Labor Management Relations Act, 1947 [29 USC §186(c)] (other than pensions on retirement or death, and insurance to provide such pensions). ERISA §607(1): (1) Group health plan. The term “group health plan” means an employee welfare benefit plan providing medical care (as defined in section 213(d) of the Internal Revenue Code of 1986) to participants or beneficiaries directly or through insurance, reimbursement, or otherwise. Such term shall not include any plan substantially all of the coverage under which is for qualified long-term care services (as defined in section 7702B(c) of such Code). Such term shall not include any qualified small employer health reimbursement arrangement (as defined in section 9831(d)(2) of the Internal Revenue Code of 1986). ERISA §733(a): (a) Group health plan.
For purposes of this part— 
(1) In general. The term “group health plan” means an employee welfare benefit plan to the extent that the plan provides medical care (as defined in paragraph (2) and including items and services paid for as medical care) to employees or their dependents (as defined under the terms of the plan) directly or through insurance, reimbursement, or otherwise. Such term shall not include any qualified small employer health reimbursement arrangement (as defined in section 9831(d)(2) of the Internal Revenue Code of 1986).
(2) Medical care. The term “medical care” means amounts paid for—
(A) the diagnosis, cure, mitigation, treatment, or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body,
(B) amounts paid for transportation primarily for and essential to medical care referred to in subparagraph (A), and
(C) amounts paid for insurance covering medical care referred to in subparagraphs (A) and (B) . IRC §213(d)(1)(A): The term “medical care” means amounts paid— (A) for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body, Treas. Reg. §1.213-1(e)(1)(ii): (ii) Amounts paid for operations or treatments affecting any portion of the body, including obstetrical expenses and expenses of therapy or X-ray treatments, are deemed to be for the purpose of affecting any structure or function of the body and are therefore paid for medical care. Amounts expended for illegal operations or treatments are not deductible. Deductions for expenditures for medical care allowable under section 213 will be confined strictly to expenses incurred primarily for the prevention or alleviation of a physical or mental defect or illness. Thus, payments for the following are payments for medical care: hospital services, nursing services (including nurse’s board where paid by the taxpayer), medical, laboratory, surgical, dental and other diagnostic and healing services, X-rays, medicine and drugs (as defined in subparagraph (2) of this paragraph, subject to the 1-percent limitation in paragraph (b) of this section), artificial teeth or limbs, and ambulance hire. However, an expenditure which is merely beneficial to the general health of an individual, such as an expenditure for a vacation, is not an expenditure for medical care.

If you're using the average benefits test to pass coverage, then remember the average benefits percentage test is only part of it. You also have to pass the nondiscriminatory classification test, and part of that test is that you have to have a reasonable classification. Excluding (or including) people by name is deemed not reasonable. So if you pick and choose which of the people who would otherwise be not benefiting to now receive a benefit, I think you fail to have a reasonable classification and therefore would lose the ability to use the average benefits test. But like Bri said, check your document. If it has a 410(b) failsafe, then it probably brings people in automatically, but chances are it brings in enough people to pass the ratio percentage test. Which might be more people than you were expecting.