mal

I have searched the prior posts regarding the imposition of a "spousal carve out" rule by a self funded health plan. I know some states prohibit such rules for fully insured plans, but aside from that is anyone aware of any other obstacle that would prevent a health plan from adopting such a rule? My reason for asking is that one of our plans has been put on notice that a suit is forthcoming. I cannot figure out what the basis of such an action would be. Any updates would be appreciated.

Risky? I don't know... I represent the Plans, not any individual employer. If I were an employer I would have to weigh the costs of arbitration versus the amount of the quarterly assessment. If the factual issues were relatively simple it shouldn't cost more than $12,000-$15,000 to push the case through AAA (in the midwest using a smaller firm that cares more about a good use of a client's money rather than billable hours) Even if the employer loses, they can accept the decision and keep it out of court.

There is no good answer. The EWL rules (especially for construction industry employers) are riddled with holes. There is a district court decision from the east coast (Massachusetts maybe??) involving the carpenters that upheld an arbitration decsion..the arbitrator had ruled that contributions to a plan under a project labor agreement did not trigger EWL once the employer discontinued the project and began working non-union in the same area. However, the court's review was limited and used an abuse of discretion standard. I think the only solution for these questions is for the plan to make the EWL assessment and for the employer to demand arbitration. Unfortunately, this means time, money, effort and inconsistent decisions for similar factual scenarios.

Money purchase plan is holding retirement accounts on a handful of deferred, vested participants. All of these individuals are likely in their 80's by now. An IRS letter forwarding request was made, but generated only one response. Death audits have turned up nothing. The Plan is silent on forfeitures. Do we make an amendment to the Plan and treat these accounts as forfeited (unless the participants resurface)? 1.411(a)-4 seems to open the door to this possibility. Is it any "safer" for the Plan to turn the money over to the state? Ideally, the Plan would like to continue to hold the money...if it goes to the state the money will eventually be forfeited. Thanks for your input.

I assume most of you are aware of the different rules for construction industry employers. We represent local/regional plans and are frustrated by the ability of a smart contractor to escape the WL monster. This can be done by leaving the jurisdiction for 5 years or by gradually shifting work to an alter ego.

I have been working through some problems with a VEBA. Currently, the VEBA (a multiemployer plan) allows a person to take his entire "account" balance upon a 12 month severance from employment. This provision applies regardless of the reason for leaving the trade...including retirement. The regulations seem to clearly prohibit any severance pay that is triggered directly, or indirectly by a person's retirement. 29 CFR 2510.3-2(b). We also found a couple of cases that which held the same. Am I missing anything? Is there a rule out there that would allow such a payment to be made?

I am having some difficulty in reviewing a DRO sent to our plan office. It is for a defined benefit plan. The provisions are as follows. 1. Assigned benefit is 50% of amount earned during life of the marriage--No problem. 2. Alternate Payee may begin receipt of her benefit on earliest retirement date of participant and must begin by time the participant retires--no problem. 3. No mention of the appropriate measuring life--worrisome. 4. AP has preretirement survivorship protection to extent of her benefit--no problem. 5. If AP predeceases the participant, order provides for a reversion back to participant--ok. 6. AP has post-retirement survivorship protection to the extent of her benefit. This is where I am stuck. This clause and #5 lead me to believe the order is not designed as a separate interest QDRO. Ordinarily, under the separate interest approach, the death of the participant after the AP is in pay status should have no effect on the administrator and the AP. Her benefit would be governed by the selection made at the time she applied for an annuity. Questions are... -Assuming this is a stream of payment order, can an AP begin receipt of a stream of payment benefit prior to the date the participant goes into pay status? -What form of benefit could the AP elect if she wanted to begin receipt of a benefit under the earliest retirement age rule? Per #6 above, a "60 month certain" option or any other benefit above and beyond an annuity based on her ex-husband's life would seem to violate the order. I realize this is confusing, but input from any QDRO gurus is appreciated.

Although it is a hot topic on another board, I have seen no mention here regarding the new LM-30 filing requirements. The LM-30 falls under a set of labor laws but it will directly affect Taft-Hartley plans. If you deal with these groups you need to get up to speed. The Office of Labor Management Standards website is a good place to start. www.dol.gov/esa

I don't regularly work with 403(b) plans, but came across a situation facing a client.... Teacher is getting ready to retire and district will purchase 25% of unused sick leave. He would like to defer this payment into his 403(b) annuity. (He is absolutely positive that it will not force him over the deferral limits.) My reading of the regs suggests this is not possible. Under 1.403(b)-1(b)(3) an employee is only allowed to enter into a single deferral agreement per year. In this person's case, he defers roughly 10% of his salary. My take is that the final severance payment would be subject to the same 10% deferral already in place. Am I correct???

A public employer allows employees with accrued sick leave to donate up to 3 days per year to a "sick leave bank." The bank is used to help fellow employees who may have run out of paid leave and are facing a serious or lengthy health problem. A question arose concerning the effect of the HIPAA privacy regulations. In order to apply for leave, the person must submit a letter from a physician explaining (in general terms) the health condition and likely duration of incapacity. The letter is sent to an employee committee that administers the bank. This has some concerned about the potential ramifications under HIPAA. My view is that the committee need not be concerned since they are not a "covered entity" as defined by the law. (Health Plan; Health Clearinghouse; Provider) While they certainly want to use common sense, I do not believe HIPAA applies to this type of arrangement. Additionally, the bank is wholly voluntary and no employee is compelled to use the bank or turn over PHI to the committee. Thoughts???

One of the training sessions from the IFEBP suggested that employer remittance reports ARE considered PHI if they are sent directly to the Health Plan for processing. However, (as ridiculous as this sounds) if the remittance reports were first sent to the Pension Plan or another entity responsible for allocating the monies, then the info was not PHI....makes a lot of sense, huh?

The Working Families Tax Relief Act changed the definition of eligible dependent and added a residency and financial support test. I sure this question has been addressed before, but con someone tell me how a health plan is to treat a QMSCO when the child does not satisfy the WFTRA definition? The plan in question was amended to include the updated definition of dependent. A family member of the child provided the plan with a QMSCO requiring it to extend coverage for the minor. The problem is that the child lives outside the home of the divorced parents and is wholly dependent upon a relative for support. Absent the QMSCO, this child would not be eligible for coverage under the plan. Thanks.

By way of update... The Plan is only "meddling" because the participant brought it to the administrator's attention. He does not want to be involved in a legal dispute should one of his children suffer a catastrophic illness or injury. The consensus on this end is that the Plan is not a party to the divorce action and has no standing to compel the ex-wife to do anything. There is also no clear plan language that would allow us to act as a secondary payor. Therefore, we have requested our participant to ask the local Child Support Enforcement Agency to send the medical support notice to his ex-wife's employer. If successful, this will require the employer to withhold the costs of coverage from the ex-wife's salary. In the meantime, we will continue to pay on a primary basis. One interesting angle that was explored involved using the Plan's broad subrogation language to "step into the shoes" of the participant and bring a contempt action in state DR court. Ultimately, we decided it was not practical to get involved in a murky court battle when the CSEA option was available. Aside from Great West and Qualchoice we would have faced issues of standing, preemption, etc.

Plan is a multiemployer, self-funded ERISA arrangement. Our participant "P" was divorced about 11 months ago. Order provides for a joint custody arrangement and for BOTH parents to provide health coverage on behalf of the children. The ex-spouse "X" has health insurance available through work but has elected not to cover the children. Under the Plan's COB rules, X's plan should be the primary payor, but since she has ignored the order, our Plan is paying benefits. What is the recourse for the Plan? Keep in mind that we are not a party to the divorce decree and P has done nothing wrong. The children satisfy the new IRS definition of dependent and if it weren't for the decree, the Plan would cover them with no questions asked. The most popular idea to this point is to continue to cover the children, but inform P that he must bring a contempt action against X or face the risk that the plan will begin paying only secondary to the plan that should be in place. Ideas??

There is also a provision in the regs that allows an employer to recoup the costs of health care coverage offered during the FMLA period. Practically though, how do you accomplish this? Many states prohibit unilateral deductions from paychecks. Also, the cost of suit will exceed the costs of the benefits.

Client is a multiemployer group that maintains a DB, DC and health plan. The admin will be leaving in the next few months and we need to post the opening. My question is where this should be done. We are planning to post the job on this website, the International Foundation site and in the local papers. Is there anywhere else that could generate a decent response?

The plan uses an "hour bank" to determine eligibility for coverage. (160 hours of service buys one month of coverage.) A plan participant is returning to work after a 15 month deployment. When he left, his dollar bank was frozen. Upon his return, coverage will commence immediately with no waiting periods. Here is the catch...since the member has transitional TRICARE for the next 6 months, he does not want the plan to recommence his coverage right away. By using the government plan, he could build up several months of surplus coverage hours in his hour bank. The regs don't seem to address this. My inclination is to resume coverage immediately and coordinate with TRICARE. Any thoughts?

No, it is a qualified plan.

We recently came across a money purchase plan that offers both loans and hardship withdrawals. The process is identical to that used by a 401(k) plan. Is this legal? I thought these plans were not permitted to make in-service withdrawals.

Yes, unfortunately I have. The rules don't seem to make much sense when applied to the construction industry, multiemployer plan. Our problem arises when you have a potential "alter ego" or "successor" of a union shop that closes its doors. Inevitably, the non-union arm ends up with equipment, personnel, contracts, etc., and we are stuck with complicated test to determine if the WL attaches to the second company.

Kirk, This is a very confusing area of the law. There is a PBGC opinion letter from 1981 holding that no withdrawal liability attaches at the time of the sale...regardless of compliance with 4204. It is worth a read... PBGC Op. Ltr. 81-19...I don't have a link.

The case is currently being litigated to determine if the injury was work related. However, the Plan will provide the 24 months of disability coverage no matter whether the injury was work related or not. Nice benefit huh?

"Every plan in the country (or at least the well-drafted ones) require participants to complete required election forms before they are entitled to commence payment. I've never seen a plan where the mere request for distribution forms is somehow treated as a definitive election as to form and time of payment. The plan document probably does require validly completed election forms to start payment. Ignoring this requirement is more than the exercise of one's power to interpret the plan document. Once a plan administrator ignores a condition precedent to a benefit entitlement, it becomes harder to say "no" to the next sympathetic case that comes along." Keep in mind that we are not flying by the seat of our pants. The guy did complete a retirement application and submitted all required documentation. Once this paperwork was reviewed a QJSA election was sent out to him. I would urge them to treat this situation differently if the participant had never returned a signed application.

By deeming this a completed application, I don't think the Trustees are out on a limb. Assume the guy was still alive and simply refused to return the QJSA election form. I think the regulations allow the Plan to begin payment, so long as it is done in the form of QJSA.

Not an HCE. No precendent. The Plan simply requires the member to submit a written application along with all necessary documents. He did this before his date of death, but did not complete (or receive) the QJSA election before he died. I think we are going to treat it as a completed application process and pay the benefit in the default 50% QJSA.