SLuskin

Yes, sorry, I was talking about FSA.

I have a client in an area devastated by Hurricane Frances. They have a 9/30 plan year end, and have requested an extension of their open enrollment. All of the meetings had been cancelled, their server was down for 10 days, and all their forms were swept away. They have just reopened their office, but don't think they can get it done in the next 12 days. They would like to give the employees a 10/31 deadline, but not pay claims incurred prior to the date on the election form. Does anyone think such relief is possible? Thank you.

Carly, some of my clients offer incentives to those who have families, and the family member has employer-sponsored health insurance, and decline family coverage. Others pay 100% for the employee and offer flex credits of 50% of the family premium.

So, maybe I have been doing this wrong. I thought Section 318 attribution also applied to S Corp shareholders (self-employed). So, for example, since I own this company and it is an S corp, I thought that my spouse and adult non-dependent children could not participate in the Cafeteria Plan that I offer to my employees. I will take any input here. Thank you.

We consider hypnotherapy to be a valid treatment for insomnia, which is a medical condition. Sleep disorder treatments are big business down here.

Both are key employees. This plan would never pass the 25% concentration test. I am sure that these owner/employees take part of their income as salary and part as distribution. They can have their attorney or accountant help them to make sure that it all comes out even in the end. This company is not a prospect for a Cafeteria Plan.

I take it that the employee is not also an owner, and that the employer is paying 100% of the premium for the employee, and that spouse is on the same policy as the employee. I don't see a problem with that at all. In fact, it looks like that employer really values that particular employee to set up a plan just for her/him.

Thanks, Papogi. As you can imagine, here sunscreen is like an American Express Card (don't leave home without it), so we may tend to be a little tougher on that than some of the other dual purpose otc that we encounter.

Has anyone approved a claim for sunscreen? In South Florida, everyone is advised to wear sunscreen every day. We have a claim from an attorney (actually a litigator) who bought sunscreen at his dermatologist. We were not able to develop a history of skin cancer. We have denied the claim, but want some other input in case he appeals. Thanks for your help.

Patient has had a gastric bypass, and has submitted a letter from Cleveland Clinic requiring certain vitamins and minerals. Would anyone have any problem approving them?

Latest publication 502 says that shipping is tax deductible, as it is part of the expense. Also, latest EBIA bulletin says it's ok to reimburse in medical FSA.

You can have the employees of only 1 of the companies in a controlled group elibible if there are valid business reasons. You are correct that everyone must be included for the testing.

We never backdate anything. One of the biggest court cases in Cafeteria Plan lore deals with retroactive benefits. I advise to amend the plan now and document why you didn't backdate.

While the elections are considered to be annual elections, the danger of taking the premium or election all at once is that a benefit could be purchased for a period of time when the participant is no longer an employee. Also, for the medical fsa, if the annual election is collected so close to the beginning of the plan year, the element of risk is essentially eliminated for the plan sponsor.

Does anyone want to comment on a claim we recevied for "sunscreen shirts'? They were ordered from a company specializing in sun protection garments and were quite expensive. We denied the claim as being for personal use. The participant did not give any information with regard to having had skin cancer (a very real possibility in South Florida) or any other medical condition. Thanks.

We have mouthwash in our printed "excluded" list, along with toothpaste.

I agree that "discovering other coverage" is not a change in status. Perhaps if there were a court order...

Then I would amend the document and clarify for the future. Make sure that it is clear in the spd and in the enrollment materials that you use.

What are you all going to use as the third party substantiation? The only concern that we have had with regard to using the computerized cash register receipts is that no name appears anywhere. It would be so easy for someone in danger of losing money to get slips from an ineligible person and submit them. Or are all of those claims just blanket-approved? Thanks for your insights.

If there is no Section 125 Premium Only Plan allowing the participants to pay their portion of the health insurance premium on a pretax basis, you can offer health insurance in a discriminatory fashion. Once you have any kind of Cafeteria Plan, however, you are governed by all of the Section 125 discrimination rules.

We have seen some plans where the employers have the employees pay for the administration. Their election includes $X for administration. Otherwise, the admin fees are paid by the employer. Forfeitures can be used to reimburse the employer if there are funds remaining after the grace period is over, and if the document states that forfeitures can be used for that purpose.

I think you can absolutely have an employer-funded fsa that limits what those funds can be used for and when they will be available. We have any number of employer-funded plans that stipulate prescription drugs only, dental only, vision only, hospital inpatient copay only. Certainly you could have a $500 employer funded fsa which covers the second $500 of the employee deductible.

The plan document may provide for a premium reimbursement account that is not the medical fsa. We have many clients who do not offer dental or vision coverage, and reimburse premiums through this other account to those who have made a separate election for it. The software that we use - DataPath - also provides for this account.

My interpretation is more liberal, perhaps because my son is a massage therapist. Sometimes a person will go straight to a massage therapist, bypassing a physician, but for a real medical condition. He treats people for migraines, back and shoulder pain, and hand pain associates with clicking the mouse too often. Massage therapists are often located in chiropractor's offices, and the patients make the appointments directly with the LMT. Unfortunately, the IRS only accepts massage therapy for something physical, and not for the alleviation of stress.

The EBIA Cafeteria Plan manual June 2003 update covers this in detail.