SLuskin

Has anyone switched from any of the DOS Section 125 administration programs to the Windows/internet versions? How is it working? Have the fees you have to pay for support and internet access been justified? What is your favorite program? Thank you. Susan Luskin

The only problem with reimbursing mileage in a medical FSA is the requirement that the third party provider of the service provide a statement showing the date, nature of the service and the cost.

No, you should only have the front page of the 5500 and the Schedule F. Even the 1999 revisions, which I have seen samples of, seem to have the same requirements as the 1998 return.

The participants cannot change exisiting elections, but can choose the new benefit until the end of the plan year if they wish.

We have been doing Section 125 administration for other small (10-400 ees) companies for 11 years. Since it is a turnkey operation, we think that we can provide the service to the employer much less expensively than having an in-house person do it. A big plus is that when the answer is "no", we say it, instead of someone at the client company that the participant has to see every day. We are in the South Florida area.

Yes, we believe that this is permissible and not cosmetic. The IRS had allowed the "old" PRK, so no reason to believe that Lasix would be disallowed.

These employees are entitled to submit these claims, and it is better seen as a balance to the employee risk of "use it or lose it". When I explain this employer risk to potential clients, I use the example of the house in a roulette game. Sure, the house will lose on one or 2 bettors, but generally comes out ahead if you look at the big picture.

I know that you have to file an SAR if there are more than 100 participants in the Medical Reimbursement Flexible Spending Account. You have to file a separate 5500 for that as well.

Thank you. Do you have a site or reference that I could go to for this? This whole PEO thing is confusing to me, and I would love to read an IRS opinion.

There is a PEO with 6 (so far) client employers. the PEO sponsors a multiple employer Cafeteria Plan with the Flexible Benefits options. It allows the co-employers to opt out of the flex and only offer the POP option to its leased employees. How can they do this, if all benefits are supposed to be reasonably available to all employees? Can each co-employer choose its own cap for the medical reimbursement?

The only time I have seen contribution differences is when health plans have different costs. For example, we administer a plan for a law firm whose primary location is West Palm Beach. They have a branch in Tallahassee. They contribute an amount equal to the employee only HMO premium to each employee. It is about $175 in WBP and about 60% of that in Tallahassee.

What does your plan document say regarding the time? Our documents usually say 60 days, as we have found that sometimes the Cafeteria Plan isn;t the first thing that families going through changes think about. After 60 days, we think they waited too long. If your document doesn't have a time frame, you should have some sort of procedure manual. Most important is to be totally consistent with all employees.

We find that it works best to have the FSA (and the rest of the Cafeteria Plan) have the same plan year as the group medical plan. That way, if the employer changes carriers, or if the carrier changes deductibles, copays, formularies, doctors in the network, etc, the employee can make an intelligent decision regarding the amount to defer into the medical FSA.

We approve most claims for "counseling" that are done by psychiatrists and psychologists. I read somewhere that counseling done by a marriage counselor cannot be reimbursed in a flex plan.

I think that if it is a true control group situation, you have to test as one plan. However, the regs permit 2 Cafeteria Plans. This is very confusing.

Our claim form and SPD state that the employee must reimburse to the employer any amounts for claims reimbursed which should not have been (either ineligible or over the election amount in case of a screw up). It further states that the employee may be responsible for the payment of all related taxes on amounts paid from the plan that are related to the expense in question.

In a Cafeteria plan, you have to make your election prior to the start of the plan year. You cannot change your election without a change in status- an employer bonus not being a status change. Employers can always make discretionary contributions to the plan, but these are made prior to the start of the year and not at the end of the year. I don't really see how to combine these 2 issues.

It is important to note that the regs say the drug has to be available ONLY by prescription. That way, someone cannot get around the restrictions by asking their doctor to write a prescription for an over the counter preparation. Anything that I can buy myself at a health food store or pharmacy without a prescription therefore cannot be pretaxed in a Cafeteria plan.

No, wellness benefits are not reimbursible in a cafeteria plan. Neither are "medical expenses" for general wellbeing.

You can never pay for a spouse's employer-sponsored insurance premium through a cafeteria plan. The spouse's employer has to sponsor a Cafeteria Plan if that premium is ever to be pretaxed. You can pay for private individual health insurance premiums through a separate FSA set up only for insurance premiums. However, the policy has to be owned by the employee and not the spouse.

I don't think so. The change in premium has to be caused by the third party provider, not by the employer.

I have recently seen 2 contrasting answers to this, both by very reliable sources. The questions was - if the child of an employee no longer satisfied the insurance company definition of "dependent", ie in college part time but not full time, but the kid still lives with the employee and is still the tax dependent, can the parent/employee pay the child's COBRA from that same health plan through the Cafeteria Plan/ EBIA said yes in its manual and seminar. The American College says no in Course 340.

The IRS views each flexible spending account election as an entirely independent election. There is no such thing as midyear mix and match in a Cafeteria Plan

We tell employers that they cannot do that because it violates the use it or lose it. We generally have something written into the document telling the employer that they can use any forfeitures to reimburse themselves for losses taken on any employees who front-loaded and quit, and to defray administrative expenses of the plan. After that, if there are $ left, and the plan uses benefit credits, the $ can be used as credits. If no credits, it can be distributed on a percapita basis to the participants in the plan without regard to whether or not they had money left in the plan.

Has anyone upgraded from the DOS version of your administration software to the Windows or internet versions? If so, did you feeel that the cost was worth the difference in the program? in the service provided? Do you mind telling me which software and how many employees you have actually administering the plans? I have been looking at 2, and the hardware improvements that we would have to make are incredible, forget the software expenditures. But if client service is significantly improved, or anything else, I would appreciate any input. Thanks.