Can a service provider who provides HSA debit cards and other HSA administrative services be a business associate of a group health plan under HIPAA? Practically, the answer should be yes, but is the service provider providing payment or health care operations on behalf of the plan? I'm not so sure.

[CROSS POSTED TO HSA BOARD]

If a plan is terminating, does it have to be restated under the EGTRRA Restated documents? It is current wiht all amednments except for the final 415 limits.

I have been asked to review a DRO which is the basis of a request by the AP for benefit payments from my client's defined benefit plan. The following are the facts as I know them:

Company receives a call from AP's lawyer in 7/2008 inquiring about AP beginning to receive a portion of her ex-husband's pension benefits. Company says there is no QDRO on file for Participant. AP's atty faxes to Company copy of DRO and cover letter from her file dated 9/1995 transmitting DRO to Company at an address that was not at that time (or at any time) the correct address for the Company's Plan Administrator.

The DRO contains the following language: "Copies of the Order shall be sent by ordinary mail to the [Company name] Pension Plan Adminstrator, who shall promptly notify the Participant and the Alternate Payee (whose addresses are listed below) of the receipt of a copy of this Order." No notification of receipt by the PA was sent to either party.

Several years ago, the Participant began recieving his benefits in the form of a single life annuity. The AP now wants to receive the benefits granted to her under the DRO. The benefit awarded under the DRO is supposed to be 50% of the Marital Share in the form of an annuity based on the Participant's life and that benefit is supposed to commence at the time benefits commence to the Participant (essentially a shared interest, it appears).

I am waiting on the Company to provide to me any information they have about what sort of QDRO guidelines and procedures they had in place in 1995 and provide me with a copy of the SPD in effect at that time. I am hoping that this may shed some light on what the AP's attorney knew at the time about the DRO approval process at the company.

I have read prior posts that have touched on some of the issues here - (1) the ability of the Company to get monies paid to the Participant back (demand repayment but, if must sue for these monies, must be able to track the funds OR offset future payments for some period to recoup past overpayments - is this permissible?); (2) the failure of the AP attorney to follow up on DRO submission - the system cannot work unless you assume that folks submitting DROs are aware enough of the process to know that a formal qualification must follow from the PA.

Is there an issue of constructive receipt of the DRO by the PA? If there were no quidelines or the SPD did not contain an address for the Plan (assuming the AP's attorney even looked at the SPD) did the AP's atty do the best she could?

My first inclination (which I, of course, kept to myself) was that the PA was justified in denying the AP any benefits because there is no QDRO (and there is the issue of laches, too). But, the Participant was well aware that under his divorce decree and under a DRO that he signed his ex was entitled to some portion of his pension.

If anyone has any advice about sending my client down a road other than relying on its records (no QDRO) and seeing what the AP does about it, I would welcome hearing it. If there is some larger issue that you think I might have missed, please feel free to chime in.

The spouse of Participant A signed the spousal consent on the beneficiary form naming Participant A's children from a previous marriage as the primary beneficiaries.

However, I don't know if they were acting up recently or not, but the spouse wants to revoke the spousal consent and have her, as spouse, listed as the primary beneficiary.

Does the spouse have a right to do this as spouse, or does the original waiver of rights always apply?

A money purchase plan has a 10% contribution rate with an allocation condition of 500 hours of service or employed at year end. Employer wants to terminate plan effective 01/01/08. I am telling them that since the benefit has been accrued that they will need to make the 10% contribution.

Is this correct? I have seen multiple sites that since the benefit has been accrued participants have completed more than 500 hours that the contribution is required.

On another note I have seen information that the plan can be terminated and the required contribution be made to the PS plan.

They are looking into doing an ESOP plan so my second question is that could they terminate the MPP plan and make the required contribution to an ESOP?

Thanks in advance.

I assume that a retiree health plan document generally refers to the underlying insurance policy with regard to its substantive provisions. Does anyone have any thoughts as to what provisions ought to be in such a document as opposed to merely referencing the policy? Better yet, if anyone has a sample retiree health care plan that they'd be willing to share offline via PM, I would be most appreciative.

Thanks.

I have a plan that was a member of a controlled group for the majority of their plan year. They actually stopped being a member of the controlled group, effective the last day of the plan year .

For that plan year, should I include code 3H on the 5500? Do these feature codes apply to plans if they have that feature at any time during the year? Or is it features as of the end of the plan year? I couldn't find anything in the instructions or the reference materials I have. Any assistance would be appreciated!!

We would like to implement a company match to our Healthcare FSA for one location only. We have no HCEs in this location. Does anyone see any issues here?

Is it plausible that previously approved 2007 claims but paid during January of 2008 can then be denied upon internal audit during August, 2008 and thus become 2008 taxable income to the employee?

I have a situation where a participant was granted a loan based on 50% of his total account balance, rather than 50% of his vested account balance. It turns out the amount granted was more than half of the vested balance.

So, I now have a prohibited transaction.

How do I correct this? I think I would just issue a 1099-R for the amount over the 50% vested balance. Then have the ER pay the excise tax on 5330.

Anything else?

I have tried to research the current rules about domestic partners and keep coming across conflicting information. The client believes that a participant's domestic partner can be reimbursed for medical expenses out of the participant's FSA account based on the following FAQ from the IRS website:

"A town has a cafeteria plan which offers health care benefits to domestic partners. Does a domestic partner and his or her child qualify to be covered under the health plan?

Cafeteria plans can offer health insurance to employees, their spouses and their dependents. The domestic partner and dependents in this case may not be participants in a cafeteria plan because they are not employees, but the plan may provide benefits to them. For example, a domestic partner may not be given the opportunity to select or purchase benefits offered by the plan, but the domestic partner may benefit from the employee’s selection of family medical insurance coverage or of coverage under a dependent care assistance program."

However, I have read other articles which said that any benefits paid to the dp must be taken from after-tax employee compensation (which makes the FSA reimbursement pretty pointless). I have read that the plan can reimburse the employee for these expenses if the dp meets the definition of a "qualifying relative" (the document points to 152 definition for dependents). Then read something that seemed to indicate that the compensation limit in the definition of "qualifying relative" does not apply - which would really make it is for many dp's to be considered dependents it would seem to me.

The document has this for the definition of dependent "an individual who is a dependent within the meaning of 152(a) without regard to 152(b)(1), 152(b)(2) and (d)(1)(B) thereof of the Code of a Participant or a former Participant in the Plan"

I greatly appreciate any clarification on this issue. Thank you!

First of all, I have placed a call for the attorney who wrote this document, but he is out for 3 days. I thought I'd see if anyone else has seen this. Anytime I have a plan that excludes vesting service it is specifically stated in the document that years of service are being excluded for vesting purposes (these would be years before the effective date of the plan).

Well, this document simply defines a "year of service" as the completion of at least 1,000 Hours of Service in a Plan Year.

Would you interpret this to mean that service before the effective date of the Plan would be excluded for vesting purposes?

Thank you

My client tells me he has friends funding long term healthcare premiums through their DB plans. Doesn't seem to be feasible to me. Any comments?

Thank you.

Specifically to a John Hancock product.

Where is everyone posting the AIC fees coming from plan assets on the Schedule I? or should I say what is the argument for the correct line.

After pulling down data from Larkspur the reporting is varied but most are reporting the charges on line 2c of the schedule I and not in 2h.

I re-read some of the 5500 preparers manual for this and I still think it is under line 2h.

In Notice 2007-62, the IRS announced its intention to issue regulations under 457. I don't recall seeing any regulations. Are they out yet? Thanks.

In the past, when I have done plan terminations for the final year of a plan, I have applied amendments made during the plan year (but after the valuation date) to change the benefit formula to 0%. Therefore I was only funding for the benefits accrued to the end of the year, which lowered the minimum contribution.

However, this plan, of a sole proprietor, does not have an amendment decreasing the benefit formula to 0%. There is only an email, on 12/4/07, stating that the plan will be terminated 12/31/07.

Can the plan funding be based on the fact that the plan will terminate during the plan year, with the projected benefit being the benefit accrued at year end?

The plan will be underfunded, but if minimum funding requirements can be met in the last year, distributions to the sole participant can be made to the extent funded, since the plan is not PBGC covered.

What legal requirements would arise if an employer requires an employee to provide proof of medical coverage from another group source when the employee is declining the company's health plan. My company is considering defaulting all employees who decline coverage in an employee only benefit plan. The employee only contribution would be deducted from the employee's paycheck if no documentation of another group plan is presented to HR by the end of the open enrollment period.

We have discovered that our clients 5500s were filed with the correct EIN number through 2004. When the plan was transitioned to our services, we received an incorrect EIN from the sponsor and the 2005-2007 Form 5500's were filed with this incorrect number. Unfortunately, we did not compare the number from the prior filings with the one the sponsor provided.

The sponsor recently received a letter indicating that the 2005 5500 was never filed. We then discovered the error on the EIN. It has been my experience that it is a very simple mistake but causes HUGE problems. Does anyone have any sage advice on how to correct this and communicate with the EBSA so that they will understand that the filing was timely but just with the wrong EIN? Amended returns have not worked for us in the past since they do not have an original filing under the correct EIN number to compare them to. Generally, a letter submitted with the amended return are not understood or are not read. Any help would be appreciated.

I have a 401(k) plan with a new comp formula for the ER non-elective. When running the nondiscrimination testing on Relius, the plan is passing ABT and Gateway. The plan is failing the ratio percentage test. If I run the test and check the rate banding box on relius then it passes. Has anyone used this as an option to get the plan to pass? If it can be used, can you explain what it does? I tried the stat. exlcusion and impute disparity options, but the plan still wouldn't pass.

VCP is complete, compliance statement is signed, and employer has made an additional contribution to the plan as required.

Participants are now starting to ask questions along the lines of: what is this extra money doing in my account?

Can anyone tell me of a short simple way to inform participants of why the contribution has been made, without going into too many unnecessary details? Does anyone have a reference to a notice of this type?