oriecat

Wow, some people are just never happy! I think it's fairly common practice to do as you said, and it's not discrimination in any legal sense. The employee is certainly welcome to have a family and all of the additional expense that goes with it, if s/he wants to get the additional insurance paid by the company. Maybe you should tell the employee, you're right, I guess we won't pay anything for anyone, and see how they like that idea!

If you are talking about a Social Security disability determination, then I would say you should definitely send the copy in, requesting the extension. If they try to deny it, then you could inform them that you were not notified of the requirements. If you still have your original COBRA notice and it does indeed not mention anything about it, then that would make your case even stronger, in my opinion.

I think it should be added on a monthly basis, that way your not hitting your employees with a large taxable amount all at once, plus it would be easier to charge the correct amount for anyone who wasn't on the plan for the whole year.

(f) Qualified benefits defined For purposes of this section, the term “qualified benefit” means any benefit which... Such term shall not include any product which is advertised, marketed, or offered as long-term care insurance.

I believe long term care is specifically excluded from coverage under Section 125.

Yes, regulations were issued that allowed electronic SPDs. Do a google search for that term and you'll find lots of articles discussing it and pointing to the regs. Here's one to get you started: http://www.mellon.com/hris/pdf/fyi_11_12_02b.pdf

I would think that would be covered in your administrative contract with them.

Thanks for your perspective, Mary. It's nice to learn how other places operate so I can keep a wider frame of mind when reading things like this. Reading back again, it sounds like I may have misunderstood the situation. I can certainly see how not receiving an accurate listing of changes each month would be problematic when dealing with so many participants!

It sounds like I am just understanding the situation differently than you. To my mind, the employee would have notified spinky and then spinky notified the carrier. The carrier didn't drop the coverage back in January and not tell spinky (altho wouldn't they notice when the billing was different?), they just dropped it in March (in response to spinky letting them know of the change of status), but it was effective back to January, due to the date of the status change. My plans would never make any changes unless I instruct them to first. Maybe spinky could clear up the confusion of who did what when. I do agree though, that at this point it is probably best to still send the cobra papers, even though the notice was late. If this happens a lot, then I would resend a notice to all participants about their notice requirements and the consequences of failing to do so.

I'm confused by your response, jsb. Why do you think the carrier did anything wrong? If the employee notified the employer that dependent status was lost, and the employer notified the carrier to cancel coverage as of the loss of status, what actions should the carrier have notified them of? That coverage would be cancelled retro to the loss of status? Obviously they did notify them of that, or spinky wouldn't know that coverage was cancelled as of 1/1.

Is that when you actually did it, or when you made it effective for? If you knew back then to drop them, then you should have sent the COBRA notice at that time.

I think I see what you're saying that the code isn't entirely clear that the exclusion total is for the taxpayer (as is my understanding). But if you work through the form 2441 on the back (line 22) it shows the max, so if you had more than allowed such as through multiple employers, then it would end up on the taxable benefits line below that.

129(a)(2)(A) says: (A) In general The amount which may be excluded under paragraph (1) for dependent care assistance with respect to dependent care services provided during a taxable year shall not exceed $5,000 ($2,500 in the case of a separate return by a married individual).

Is that just for retirement plans, because I would assume the OP was about health insurance plans, since it's in the welfare plan section.

To my knowledge Sec132 does not require annual elections, so employees could make new elections at any time that the company allows, as long as the 132 rules are followed.

I'm not sure I understand either. So if A is a Plan Participant, A commits some act of domestic violence and cuts his/her hand in the process, can the treatment for the cut hand be denied because it was received during the course of a crime or would it be required to be treated under the reg you specify? Is that an example of the question?

Yup, in that case, I agree.

Everybody but me, I guess! Probably because our plan is employee + child(ren), so adding another kid wouldn't cause a change to family plan... so I assumed the employee was covered, then adding a kid would move it to family...

Maybe I am misunderstanding, but the original question makes it sound like the employee is already double covered (spouse has employee+1 and wants to change to family to add the new baby). If that is so, then there is no change in the employee's coverage and it seems like he shouldn't be able to drop at this time.

Thanks for your reply. After I posted I started thinking more about making it easier instead of taxable refunds and thought perhaps a flex premium holiday in the new plan year would be a way to do it. So we could fund everyone's account for a payroll but not deduct the funds, and have the deposit moved from the gains account. Would that be a permissible way of doing it?

The gains in our flex account continue to accumulate each year and we are thinking about refunding some to participants. Each year we refund ourselves for the admin fees, and even after that we should have over $5k left over. If we do choose to make a taxable refund to participants, should it be done equally to each, or proportional to their annual election? Also since this past years experience gains include experience gains from previous years, is it proper to just refund based on the most current participants or should participants from all years with gains be included? Is it permissible to split the gains between health and dependent care based on actual experience, or does it all have to be lumped together?

I believe so. It's still a form of a group health plan.

If the spouse is covered, they must receive a notice. Notice to the employee is not sufficient notice to the spouse. If they live at the same address, you can send one notice under both names. You do not need to send separate notices, but the one notice cannot just be addressed to the employee.

Yeah, aren't there any pre-natal visits? Or are those charged and paid for separately.

I think they should be allowed to make any changes. A child who was born and died in the same year is still considered a tax dependent for the year, so I don't see why the status changes wouldn't be allowed, since they did in fact have a change in the number of dependents. Does your health plan provide a period of coverage for newborns before they are required to be on the plan? Both of ours give the first 30 days, so in this case we wouldn't need to add the child. I thought it was fairly common.