SLuskin

You can write the Section 125 document as either the opt-in method (enrollment form) or opt-out method (waiver form). The docs and SPD need to be clear, and spell out the permissible status changes. Someone in HR needs to monitor any changes, etc. Hopefully, they have a Section 125 administrator that can answer any questions about the ability to make any changes to any of the pretax plans.

Diversified Administration, Inc. personal service, custom plan designs, works with smaller employers, very compliance oriented, bilingual

Does anyone know if an S corp shareholder or LLC member pays his part of the premium with after tax dollars, can this still be deductbed back off on the 1040? Or, does it have to be on the Schedule C or K 1 to do this? In order to pass the new 105h tests for fully insured plans, the owners can no longer have the company pay a larger percentage of the premiums for themselves. This was never an issue in Section 125 plans, as they cannot participate in those plans. But for the underlying insurance now, what happens? Thanks.

Terminated employee elected COBRA for herself and qualified for the ARRA subsidy. She did not choose to cover her child at that time. Now, it is open enrollment and she wants to cover the child. The COBRA participant is still entitled to the ARRA subsidy, but what about the child that she now wants to cover? Thanks.

An employee with spouse coverage is contributing the maximum monthy amount to his HSA from January to September. October 1, spouse gets her own coverage at a new employer and it is non-HDHP coverage. Can the employee continue to contribute the amount for employee only coverage for the balance of the calendar year? It will put him over the employee only limit. Thank you.

If the benefit is really de minimu, it is a fringe plan and there should be no imputed income. If they can get medical exams, treatments for illness or injuries (more significant than those which require a band-aid), then it seems like the value of the benefit should be imputed income. I have no idea how that value would be determined.

However, if any are group plans, and they had over 100 participants on the first day of the plan year, they need a 5500. Same thing if the Cafeteria plan has a medical FSA. Needs a 5500 for the medical FSA but not the "cafteria plan". Lots of CPA's have no clue about this stuff and give awful advice. The insurance carriers will prepare the Schedule A, but generally they do not prepare the 5500.

Definitely not an attorney we use, but he is from the benefits division of Proskaeur Rose, and the broker who brought me in to the client uses him. I have learned that, just like we have honest differences of opinon here on this board, that the benefits attorneys do too. I also read something that said both approaches are ok.

Pretax payroll deductions just like the medical FSA and DCAP FSA. We have very few people using this, but it can be made available. Must be in the plan docs and spd. DataPath and other software definitely include that in the administrative software.

The plan document would also have to provide for a premium reimbursement account. You cannot reimburse the premiums through the medical FSA.

Thanks, Ivena, I agree with you. I think pretax cannot be used. The attorney advising my client says pretax is used and then that income is imputed as well. He is from a fairly big firm and has a powerpoint explaining that DP premiums are to be pretaxed and then how to impute the premium. I have never heard of that before.

We have always advised our clients who offer domestic partner benefits that the premiums for the domestic partner (1) are imputed income to the employee if the premiums are paid by the employer and (2) premiums the employee is required to pay for the domestic partner coverage must be taken from the employee's paycheck on an after tax basis. Today, someone told me that their attorney said the IRS doesn't like the after tax basis for the employee contribution, that it must be taken as pretax and then imputed income back to the employee. EBIA does not agree. Has anyone else heard anything like this? Thanks so much.

Our software provider is charging us to do this. We would never have been able to do it ourselves. We are adding a minimal amount to those plans who require the reporting just to cover our cost.

In the same vein, the question that came up today is this: LLC with 250 ees. 51 are LLC members. Identical benefits, identical waiting periods. LLC pays 100% for members, who then must impute this income. LLC pays 75% for all other employees, including upper management that are not members. Does this pass? If not, what sense would it make to have the LLC pay 75% of the member premiums and then have the member pay the other 25% and be grossed up for it? This piece of it is really confusing for me.

If worded correctly, it would mean all otc drugs and medicines with a prescription. The ones without a prescription are already excluded. The documents need to be amended one way or another to reflect if that plan sponsor does or does not want to reimburse the otc's with rx.

Patricia, yes, that would be a violation. I also don't think that just because Section 125 is satisfied that the group will pass these new regs. Example, company has 1 health plan. Rank and file eligible at 90 days, middle management at 60 days, upper management at 30 days. To make this pass in Section 125, all you have to do is not allow anyone to pretax until 90 days (contributions of other groups, if any, post tax until after 90 days). But these new regs will not allow you to have different waiting periods. Period.

How long after the start of the plan year was this noticed? If right after the first deduction, I would tend to call it a mistake. If anything else, I would call it buyer's remorse and not allow it.

Yes, they would have one short year 9/1 to 12/31 and then 1/1/ to 12/31 thereafter. The plan would have to be properly amended, the SPD updated and election materials clear.

You are correct. That is a qualifying event for the spouse but not for the employee. She will have to wait until the next open enrollment period to drop your coverage.

But if the medical FSA is a general assets of the employer account and not in a trust, no 5500 is required, and no final 5500 is required either.

Grandfathered plans do not need to let these adult dependents on if they have access to other group coverage.

After December 31, 2010, will medical supplies such as blood pressure monitors, reading glasses to correct far-sightedness, fever thermometers, etc. still be reimbursable under an FSA? Thanks.

It's more what is not permitted- long term care, cash value life insurance. What to beware of - pretaxing disability, both short and long term, results in taxable income if disability benefits are received from the carrier. Most of the "worksite marketing" products can be pretaxed.

Does anyone know if there are any penalties associated with not having a Summary Plan Description for a Welfare Benefits Plan? EBIA ERISA manual says that an SPD is required for every single welfare plan, regardless of size. One of our clients had a DOL audit and the DOL made them go to a law firm and get a very expensive Welfare SPD (not the same as a wrap document so that you only have to file 1 5500). I would like to tell my other clients about this, but they will ask what the penalties are for not having it, and I can't find that anywhere. Thanks.

Client company only offers health insurance coverage to its Management Team. Employee in question was demoted from the management team for poor performance. There was no gross misconduct. Employee lost eligibility for the health insurance because he is no longer in management. There was not a resulting loss of hours. Is the employer required to offer COBRA to this employee? Thanks for your thoughts.