oriecat

The IRC also uses taxable year: 26 USC 125 (i) Limitation on health flexible spending arrangements For purposes of this section, if a benefit is provided under a cafeteria plan through employer contributions to a health flexible spending arrangement, such benefit shall not be treated as a qualified benefit unless the cafeteria plan provides that an employee may not elect for any taxable year to have salary reduction contributions in excess of $2,500 made to such arrangement.

I agree, with an off calendar year plan, it will be a lot easier to just limit it early than to have to deal with the issues that will come up otherwise.

My understanding is that the $2500 cap is calendar year for everyone. Plan year is irrelevant.

The Section 125 FMLA Regs allow contributions to be made up pre-tax in later plan years, so if you're talking about a FMLA leave, it may be permissible.

If the only thing you are doing is the pre-tax premiums, you only need the limited type of Section 125 plan often called a Premium Only Plan or POP. You would not need a full blown cafeteria plan. POP plans should be pretty cheap, so it sounds like you might be paying for more than you really need to.

I think it's an absolutely horrible idea. Everyone's medical and dependent care situations can change year to year. People need to think about these things.

Why is this thread titled "COBRA Notice, Alternative coverage"?

Our accruals are hours based, so if you are not working or being paid any hours, then you won't accrue anything.

Oh what about if he is employed and could get coverage from an employer?

It is my understanding that if she increases her election due to the change in status, that higher amount only applies from the time of the change, so she would not be able to go back and submit additional expenses from before the birth. So I don't think it would accomplish what she wants, if my understanding is correct. So for example, her election would be $1000 from 1/1 to 8/31, and she already used that $1000 so she's now at 0.00 Baby is born 9/1 and she changes her election to $2000. She now has an additional $1000 to pay and be reimbursed, but any claims have to be for services after 9/1. I think this is all due to the consistency rule.

An employee's covered child has turned 18, moved out, and isn't taking his meds, so she wants to drop his coverage (why pay for it, if he won't use it?) Prior to PPACA, I don't think this would be an issue since he would no longer be a dependent, but now with the expanded rules for dependents, I am thinking she cannot drop his coverage until open enrollment because despite it all, he remains eligible. Am I missing something?

Are there a law or regulation in regards to when an employee's pretax HSA deduction should be deposited into their account? This is employee contribution only, no employer contribution. A friend of mine is paid weekly but their HSA hasn't been deposited in over a month. Thank you!

Of course you are, as it should be! Slacker stopped coming to work! Here's my question - why would the corp still pay the bonus to someone who is deceased? Shouldn't the new owner receive it instead?

Yes, you would have to have a Section 125 plan to take the premiums pretax. This is completely unrelated to the 401k which while it can be included as part of a Section 125 does not have to be. A stand alone 401k plan is still pretax. I am not familar with HSAs at all, so I don't know if those require a Sec 125 to be pretax.

So would it be fair to say that you can say you'll have a short plan year at the beginning of the year, but can't decide midway that you're making it a short year?

I'd say that applies from date of hire until the first anniversary, otherwise it should say beginning after your first year of employment.

We have an employee who terminated about 10 years ago and so his 401k loan at that time defaulted. He was rehired maybe a year or so later and now our recordkeeper says he can never have another 401k loan again because of the default on his record. Is this the law somewhere, or would this be a plan provision that we should be able to get changed?

Not sure if this will help, but one thing we did a couple years ago when having trouble with our testing was use the top 20% for the HCE, instead of just based on the salary amount. It gave us a much larger employee base to spread the HCE contributions over and brought their average down to where we passed.

I'm surprised the hospital itself hadn't already looked into getting the COBRA elected.

2001 would have been the new (at the time) GW Bush administration.

I think it would still fall under the Sec 106 exclusion and be non-taxable. Medicare is still a health plan.

Yes, I have only been providing them the company paid cost. Luckily changing the basic life won't affect our supplemental at all, I was afraid that employees would lose all of it if we canceled the basic. I got a good reply from our broker saying much of the same stuff and I forwarded it to the VP with a thought about how if we are trying to save money we shouldn't put the company in an unknown financial situation, compared to the known, budgetable expense of the insurance. I also provided the cost if we were to just reduce the amount (which is already a pittance but if they want to save money...) Haven't heard back from her yet.

Me too! Thanks for all your thoughts.

Unfortunately no, not a type. We are in a serious budget crunch and they are looking for any and every expense that can be cut and are viewing the life insurance as a wasted 10k each year because it is rarely used. Well that's a good thing with life insurance! So they thought of keeping the money and paying the benefit directly if it happened, but like leevena mentioned, I brought up how we would need to be prepared for the possibility of multiple claims, since our last claims, while 4+ years ago, we had 75k within a year. Frankly I think it's stupid that they are making such a big deal out of this when it's barely over $800 a month now after all the layoffs we'd had this year. But it's my job, I have to look into it, even if I disagree with it, and hope that in the meantime I can talk them into doing something else.

As a cost saving measure, my company is pondering canceling our company paid life insurance policy and perhaps doing something like a self insured arrangement. What things do we need to consider to do this in accordance with ERISA and IRS regs?