SLuskin

Our docs are written so that the grace period is the earlier of 90 days past the date of termination or 90 days past the end of the plan year. Our software does not have any trouble tracking the dates. We have found that our employers, for the most part, like to know the terminees balances asap. The important thing is to have the information both in the plan document and very clearly in the summary plan description.

I was getting my info about the waiver from the Benefits Link to the Revenue Ruling. The 3rd paragraph in the FACTS sections says. "At the time an employee is hired, the employee receives a notice explaining the automatic enrollment process and the employee's right to decline coverage and have no salary reduction. The notice includes the salary reduction amounts for employee only coverage and family coverage, information on the time by which an election must be made, and the period for which an election will be effective. The notice is also given to each current employee before the beginning of each subsequent plan year, except that the notice for a current employee includes a description of the employee's current coverage, if any."

I disagree with DK Ellerson's response here. I believe that you do have to file a 5500 for a health FSA with more than 100 participants. You do not have to file a Schedule F for that plan, however. You answer the same questions as for any group medical plan, but in this case, there would not be a Schedule A, either. There might be a Schedule C if you paid someone more than 5000 to administer that plan. I have no idea what the requirement is for the SAR.

What kind of waivers would you use? The ruling seems to indicate that a fairly elaborate waiver would have to be made available to all employees upon initial eligibility and again on renewal. I was thinking that it is no more trouble to have the employees make a positive initial election, with rolling elections thereafter, than to go through some of these girations.

We don't perform the calculations if the test would pass by default. For example, in an S corp, where the only hce are the shareholders and family members, they can't even participate in the plan. So the key percentage is zero, and the hce's contribution is also zero. A number of our clients are small companies like that. For the rest of them, we do the numbers.

Some states have insurance continuation coverage regulations. In Florida, it is called Florida Mini-Cobra. Employers with 3 employees through 19 employees are covered by this. The "premium" that is charged is 15% instead of the 2%. So, this doc might have some state continuation rights.

This looks like part of a controlled group to me, so I would lean toward Federal. However, are both groups on the same health plan? covered by the same carrier? have the same plan year, options, etc?

In a Cafeteria Plan, it is ok to discriminate against the key or HCE. Just not the other way. As an aside, I thought the self-funded plans did have discrimination testing, and that if the plan is tilted in favor of the HCEs, then the contributions made on their behalf become taxable income to them. I am not aware of any such discrimination issues in fully insured plans.

At this point, one can only wonder what the prescription was for his wife! I could not find anything in Section 213 or Publication 502 saying you cannot reimburse a physician for a self-prescribed medication. My gut does not like reimbursing this claim, but could find no support for my feeling.

I have also read something recently which showed botox injections useful for children with cerebral palsy. I would go with the diagnosis, and not use the fact that the drug has some cosmetic uses also stop me from reimbursing someone who has submitted medical records stating the condition as MS.

Right, but there are no owners in the gov't plan. Are the officers those who are elected? What about people who are appointed? We have never done a gov't plan due to the red tape that is involved, but would still be interested to see the answer.

We have a physician who writes prescriptions for her children, and we reimburse them, but of course, not the office visit. I would not have a problem with the wife's prescriptions. I did not know that doctors could write prescriptions for themselves. Does this violate some sort of medical ethics?

DataPath is working on one of these cards as well. I was speaking with them about the concerns I expressed, particularly the one about "who is the recipient of the service?" They are aware of the shortcomings and apparently are working on it. It is not ready yet, but I will be looking at it when it is. Even if these cards could read the barcodes, which I don't think they can, having seen a few demonstrations, if any of you are using them, how do you determine if the person for whom the prescription was filled was a qualified person under the plan? I know alot of people who still pay medical bills for their over age 25 kids, or for their non tax dependent parents. What would prevent the plan from reimbursing those expenses?

That is a really interesting question, and one that the participant did not ask me. In prison, the inmates are required to work, and they are paid. The money is put into their commissary accounts. They do not pay taxes on it (average wage is under $1/hr). Still, that may be a stretch. Certainly, if he (accurate use of gender here) were able to obtain employment, the spouse could increase the FSA.

Thanks for the input.

We have been solicited by a few of the companies that offer them. I have some concerns and so haven't done it yet. For example, if used at a pharmacy, we would not be able to tell if a prescription is cosmetic, not permitted by provisions of a particular plan document, who the prescription is for (domestic partner, a parent who is not a dependent??) Or, if at a dentist's office, for procedures like teeth bleaching or some of the new products that they sell you there. How to differentiate date of service from date of payment. I have heard stories where people figured out how to manually by-pass the system and have purchased potato chips and gasoline. That being said, when some of these kinks are worked out, we will really look seriously at using these cards.

Does anybody have any idea how the regs treat a spouse who has been released from prison? Can the employee add the spouse to the health plan?To the Cafeteria Plan? Did the former inmate "lose" coverage, because the gov't is no longer paying for the medical expenses? Do the health insurance companies have to allow this person on to the plan? What about pre-ex. Medical records would be impossible to obtain. Thanks for any input.

We see many differences by age category and by income level. For example, some of the higher paid (not necessarily highly comp) employees are doing things like lasik surgery, and using up their whole annual election in 10 minutes. We also see the participants with the $$ doing some of the more expensive dental restorative procedures. We have lots of orthodontia. If I had to choose one category with the highest number of participants, but not the highest number of dollars, I would say that for my company it is prescription copays. We are seeing recently alot of "non-formulary" brand name, highly advertised prescriptions at much higher copays than the generics or the formulary brand name drugs. Hope this helps.

I know that in Florida, workers comp premiums are calculated on the amount before the Section 125 pretax payroll deductions. Does anybody know how it is treated if the employer makes "seed contributions" to the plan, or if flex dollars are used? Thanks.

I usually call the 401K administrator to find out how they test and do it the same way. Once in awhile, the dcap testing only works using the top 20% election. Then I try to convince the 401K plan to do it the same way. But once they are defined hce, if they are the only ones who want the dcap, then they can't have it at all.

An employer contribution to a medical fsa would not show up anywhere on the W2. We have a number of employers who "seed" the accounts with contributions. We also have 1 employer who could not get a group plan that he considered reasonable, and so gives each employee $1200 which must be used in one of the Spending accounts.

Many companies use a master document where all elements of the plan are included and have the same plan number. Others have, as you called it, a master document, and then sub documents for each part. Each has, then, a different plan number. Maybe read the FSA doc that you have and see if the other parts are not incorporated in there somewhere. Also, how about your election form. Does it give you the opportunity to pretax premiums as well as participate in the spending accounts?

For expenses to be eligible for a DCAP, either the employee must be a single parent, or both spouses must be gainfully employed (or else a fulltime student or unable to care for him(her)self.

The 5500 for 2001 would be the final. Remember, the expenses reimbursed during a grace period in 2002 would still have to have been incurred in 2001. There would be no plan year 2002 participants, eligibles, employer contributions or salary reductions.

You can't limit the number of key employees. If a person fits the definition of key, they are key. However, you can elect the top 20% for HCE, as long as that election is consistent for every benefit plan. In other words, you can't take the top 20% election for the Cafeteria Plan and then take the straight over $90K definition for the 401K plan.