SLuskin

I have a client who does self-funded health ins. administration, but uses us for the FSA/dcap. They have a calendar year flexible spending plan. They want to start an HSA March 1, 2008. They want a 2 month year, just January and February 2008, then terminate that plan. Then start a new plan March 1, 2008 with dcap, but only limited purpose FSA,and have that be a short plan year ending 12/31. First new full plan year would be 1/1/09 to 12/31/09. They do not have the 2 month and 15 day extension period. Does anyone have any thoughts on this? Thanks. My call with them to discuss is Thursday at 9:30.

Thank you. The FSA is not for the same employer. It is for a prospect that has no plan at all. The broker asked me the question. I don't have access to this prospect yet.

This is for the gurus. I have had 2 similar questions today. Both have to do with the employer providing different amounts based on length of service. The first is for a POP plan. They want to contribute 75% of the premium for anyone there over 10 years, 65% for those with between 5 and 10 years of service, and 60% for those with less than 5 years of service. My initial response is no, you can't do that. Do any of you think that if we make the contributio 60% for all the HCE that we can have this differential for the NHCE? The second is for an FSA. Employer wants to seed the accounts as follows: over 1 year of service $100 per year, over 2 years of service $250 per year, over 3 years of service $350 per year. Again, my initial response is no. If we exclude the HCE or give any HCE only $100, would this plan arrangement fly? Thank you.

Why would the company open themselves up to the liability of doing this themselves when the cost of outsourcing would be less than the cost of the software, the salaries of the person doing the job, etc. There is alot of personal medical information and procedures would have to be set up for that. Many of us on this board do FSA administration as their business. My suggestion would be to find someone in a business networking group that outsources their FSA administration and find out who they use, if they are happy, etc. We use DataPath software to administer plans for our clients, but it would not be cost effective for a single employer.

The IRS doesn't permit this at all. It is not employment related. The same idea applies to elder care under Section 129. If your parent is your dependent and lives with you, and needs senior daycare during the day so that you can work, that is an eligible expense. If your parent is your dependent and lives in a nursing home, that is not an eligible expense.

This is one that I would discuss with my contact at the employer. I would express my doubts about the reimbursement and get their feeling. I have found that no matter which way it ultimately goes, this is the way that shows the client how responsive you are. Personally, I find the second bike more likely to be personal.

We had denied a claim for teeth bleaching for the CFO of a good client. Now he is saying that this tooth is part of a root canal. Every few years the dentist takes off the cap, rebleaches the tooth and puts the cap back on. Does anyone consider this to be different from other types of teeth bleaching?

We send a paper copy of the SPD as well as the SPD on CD with instructions to (1) email to all employees, (2) post on company intranet, or (3) copy and distribute the paper.

My client has 2 FSA's: a general purpose and a limited purpose. They also have an HSA. Both FSA's have a limited purpose 2 1/2 month extension period. An employee in the limited purpose FSA also makes HSA contributions. She is leaving the firm. She wants to roll over her FSA balance into the HSA. I cannot find anything that says you can roll over other than at plan year end. I have been over IRS Notice 2007-22 a few times, and it seems totally silent on this issue. Also, assuming that she can do the roll over, do we always have to look at the FSA balance on September 21, 2006? What if the person was not an FSA participant in 2006, just 2007? Thank you for your help.

I have been administering FSA plans since 1990. For 14 of those years, my husband was a federal prisoner. We filed a joint tax return the entire time. There were many times in those 14 years when I had to purchase medical things for him, for example, prescription glasses or sunglasses. I had researched the status change rules a number of times during this experience, and did not find anything that would help me. In fact, when he went to prison, I had elected dependent daycare, and found I could not use it since my spouse was not employed or disabled. However, the one comment about if he lost his job as a result of the crime might be helpful. It is unlikely at this date that the 30 days since the job loss have not passed. Best of luck to the participant. It is not easy.

My client has 2 married employees. One is highly compensated and one is not. Neither are owners or officers. They want the dependent daycare benefit. No one else has elected daycare. If the nonhighly compensated spouse elects the daycare, do you have to consider that he is married to a highly compensated employee?

If the deductible on the HDHP had not been met, then the expense is not reimbursable.

A participant is a musician in a loud band. An audiologist has recommended ear plugs to prevent hearing loss. Do you think this is a qualified expense?

It makes sense to me. If the employees can make their HSA contributions pretax through the cafeteria plan, they save the social security and medicare taxes as well as the federal income tax. If they just deducted it on their federal income tax return, they would just get the income tax deduction.

We have a claim for the wife of an attorney in one of our law firm clients, who have submitted a claim for breast implants. She submitted a doctor's letter explaining that he was treating her for assymetry. This looks cosmetic to me, but I wanted other opinions because I know that this action will be harshly questioned by the client. Thank you for your help.

We take the regular amount from the last paycheck assuming that the check is for days worked before termination. For example, we are paid on the 15th and the last of the month. The check on the 15th is for work starting the 26th of the previous month through the 10th of the current month. If the person worked during that time, we would take the deduction from the check issued on the 15th of the month.

Introducing a new health plan is most definitely NOT a change in status. If enrolled in the FSA, the election cannot be changed for the plan year. A person in a general purpose FSA cannot make any contributions into an HSA. No exceptions.

EBIA says that this concierge fee is not reimbursable. You pay the fee just for the privilege of going to that particiular doctor and getting VIP treatment - i.e. shorter wait time than the patients who have not paid extra. You also get some exams, etc. but you pay the same whether or not you receive any medical treatment at all. We do not approve those claims. I have been to the MDVIP seminar, and they present it as if there isn't even any controversy. I got into quite a tiff with the guy, and I don't think I am on his most favored persons list.

I agree. Once you have met the deductible of the insurance policy, then any FSA expense should be reimbursable. I have 2 other questions with regard to the FSA along side of an HSA. I have heard that you can also pay for over the counter meds through the FSA before the deductible is met. Is that true? What about expenses for family members only (and not the employee) if the family members are covered by copay plans? Thanks

There is not a statutory limit. However, we always recommend a cap or maximum for each client and make sure that it is in the plan document, summary plan description and all other communication materials. First of all, putting a maximum protects the plan sponsor from an employee who would use a very large amount at the start of the plan year and then quit. Second, having a cap often enables a plan to pass the discrimination test by limiting the amount that the key and highly compensated can elect.

First, what is the reason that the employer wants to stop the contributions? Second, what does the plan document say about terminating or modifying the plan? Also, if some of the benefits are for insurance plans, the carriers may require a certain percentage of employer contribution.

Thank you all for your input. I will contact Datair and Relius.

You have to read the Cafeteria Plan document. There should be a section on terminating the plan. We write ours with pretty liberal termination provisions, i.e. the plan sponsor can terminate the plan at any time.

I have been using ATX for years. But now they want you to pay per return. What 5500 software are you using and how do you like it? Thank you.

Coverage would certainly not be available. To my knowledge, no furloughs are granted so that the spouse could be seen by any network physician. Therefore, the actual impossibility of receiving benefits would seem to be a change in residence making access to the network impossible.