SLuskin

What about reimbursing individually owned health insurance premiums if the document so provides. We have a client with a Latin American operation. The employee-participant lives here, and splits his time between US office and Rio office in Brazil. He participates in the group medical plan of the employer. He has also purchased an individual policy in Brazil to cover expenses there. Can he pretax the Brazilian policy premiums in the premium reimbursement account? (I know EBIA cautions against using this account, but our software provider has slots for it)

How about changing the definition of HCE to include only the top 20% in compensation? Then you can have the plan.

We checked this with an attorney and she said that you cannot run a spouse's COBRA from the spouse's former employer through the flex plan of our client's employee.

We have a guy who enrolled in only Part A of Medicare in February 2008. He is going to retire 1/1/09. His wife will lose coverage when he retires. Is she entitled to 18 months, 36 months, or the 36 months minus the number of months he was Medicare eligible prior to retirement? Thank you.

FSA's can very most definitely be funded (1) entirely with employee contributions, (2) entirely with employer contributions, or (3) a combination of employee and employer contributions. We have any number of Section 125 Plans with 3 or more FSA accounts, each defined differently. Employers can limit what an FSA account will reimburse. They do not have to offer the entire gamut of 213(d) eligible expenses. Benefit of having the employer money in the FSA- first of all, there is no rollover. If the employer does not want the money to roll over, only wants 1 plan document, 1 5500, etc, this is the way to go.

I always try to get the client to go the DFVC route. If they balk, I make them sign something saying that they understand that they were advised to go this route before trying the reasonable cause letter. However, so far, only 1 of the clients has ever had to pay a penalty with the letter, and that penalty was reduced from $75,000 to $2,500.

I had always thought that Church plans were exempt from COBRA. Now I am finding out that they may elect to offer COBRA. Once a Church offers COBRA, can they ever go back and claim that they are exempt? Would they be subject to the same penalties for noncompliance if they choose to offer COBRA, but do it improperly? I have gotten an emergency call from the Executive Director of our Temple on this matter, and I am afraid they may have gotten themselves into some sort of trouble. Thanks.

There are many on this board who do administer flex plans (including us) who would recommend against this for 2 reasons. If it is not your core business, I am not sure how you would evaluate the tricky claims, and also how you would figure out if something is or isn't a family status change, etc?

Nope. We are stuck there at the same level we were at when I started to do these plans about 18 years ago.

Why wouldn't returning to work fulltime after maternity leave be a status change? She could elect at that time. Or, if it is a paid leave, she could make her elections prior to January 1 and have the deductions taken out pretax from the paid leave.

The reason that the TriaCare can't be reimbursed under the POP part of the plan is that TriCare is sponsored not by the employer, but by the Military. If the employer has a premium reimbursement account in its plan, then that is the correct place to claim those premiums. However, if they just have a medical FSA and a daycare FSA, then the premiums can't be reimbursed. The IRS has stated multiple times that misaprehension of the law or the regs does NOT constitute a reason to change an election. Only an impossibility would allow a change. So, for example, if I elected the DCAP, but have NO DEPENDENTS AT ALL, most likely I could change the election. However, everyone can use the medical FSA, so there would never be an impossibility. The guy is just out of luck.

It is hard to picture a circumstance where someone working for another company could qualify as a dependent under Section 152 definition. I have never seen this discussion regarding a dependent, most likely because a dependent is rarely employed and rarely has group medical coverage with another employer. However, we did get a legal opinion on a SPOUSE'S COBRA - if that could be run through our client's private individual health insurance premium reimbursement account. We were told that is not possible. It is important to understand that under the new regs August 6, 2007, for the first time it says that the EMPLOYEE"S COBRA premiums from a prior employer can be reimbursed pretax if the current employer has such a reimbursement account in their plan.

No

This would definitely be one of the changes the regs permit if the documents have been written to allow changes like this. The documents we use have provisions for employers changing their contributions midyear and allowing participants to reflect this change via pretax payroll deduction. As in everything associated with these plan, you have to check the documents.

I would call the 5500 help line 1-866-463-3278. Get the full name of the person you speak with. Rather than guess, they will be very straight with you. Whenever I call them, I don't give the name of the client, but I do give my name and firm name.

Did payroll continue through August 1? If so, then deductions would have been made for the FSA and those claims would most definitely have to be paid. George is correct in that the employer can never recoup any difference between funds disbursed and funds contributed.

Thanks George for your valuable inputs. I shall go ahead the way you guys have suggested. Kindly let me know whether Administration of Cafeteria Plans can be provided with deviations from the checklist I have provided. I mean what other different process / method / steps I can incorporate / delete to provide an optimal adminstration process. We use the DataPath software. It is comprehensive, but on the expensive side. It has been well worth it for us. When I hire someone here, it takes quite awhile to train them to do everything properly, and we have our procedures outlined step by step. DataPath is having an intensiver 2 1/2 training on their software August 27-29. I am sending my assistant VP to that session to make sure we are getting everything out of the sofware that we can. He has been here over 2 years. So, your zeal to get it done immediately might be a little ambitious. Some of us have been administering these plans for almost 20 years and are still learning.

I am understanding the question differently. I thought the questions was, can you submit an annual bill for daycare, and just reimburse as the payroll deductions are made? We did this over 10 years ago, and then read something from the IRS which said that was not permitted. The provider of the service must give a receipt for each period of daycare. I do not have a problem with a period of daycare being 1 month. If someone is paid semi monthly, we would then reimburse 1/5 of the monthly expense the first pay period and the balance on the 2nd pay period, assuming that the payroll deductions equalled the expenses.

As far as I know, you can (1) discriminate in favor of the non-HCE's; and (2) contribute one level to those with employee only coverage and another level to those with family coverage. If the group losing life insurance is all NHCE, then it seems permissible. Otherwise, that employer should find another way, outside of the HSA and Cafeteria Plan, to make up for the lost life insurance.

If the FSA plan document says it can be used for dental expenses, then you can use the FSA. You can use the HSA for any eligible 213d expense.

Sorry, the rules are not logical. You can only use the FSA for dental, vision, preventive and post deductible expenses if you have an HSA. I understand that the chiropractic visits are not covered under the medical plan, but until the person has met the statutory (not policy) deductible, the FSA cannot be used for chiropractor visits. In addition, no visit with a date of service prior to the date the deductible on the underlying HDHP was met can be considered under the FSA.

Thanks, George. The reason that I hesitated was that the first Rx sent in by her MD had no diagnosis. When I called the office and spoke with the nurse there, she told me there was no diagnosis in her chart at all. So we denied the claim. Then an RX from her Chiropractor came in with the dx, and that's when I posted the message.

I have a participant who submitted a claim for the gym, along with an Rx for "strength training medically necessary secondary to cervical & lumbar spondylosis". Would you allow that? Thanks.

Let's assume that the plan document has a provision for the reimbursement of private individual health insurance premiums through a reimbursement account separate from the one which reimburses medical expenses. The new regs effective August 6, 2007 permit this. The question seems to be, is this a group premium, or just a list bill premium? Most likely it is a list bill premium or an association plan, where individuals each purchase their own policies, but get group-like rates because they belong to a certain group, like the CPA' s or AARP. If this were the case, I would permit it.

So, do you think if someone wants the unlimited option, which will not be available until March 1, they should be able to elect that, so specified, for the January 1 start date? If properly announced, do you think there is any way someone could make a general purpose election for January and February, and a limited election for March through December? We could design the election form to offer that option if it would not be a violation.