leevena

Flyboyjohn. I apologize, but I do not know what you mean by the term “real” group health plan used in some of your prior comments. So I would not necessarily say that I am in agreement with your comments regarding the 100+ plans. Health FSAs are employee welfare benefit plans, and unless they fall under a regulatory exemption, employers must file an annual Form 5500 for those plans. Health FSAs are exempt from the annual filing if they: • Cover fewer than 100 participants and are unfunded, fully insured, or a combination of insured and unfunded; • Are a governmental plan; or • Are a church plan under ERISA. Many health FSAs are not fully or partially insured, so they would not fall under the first exemption. An unfunded welfare benefit plan is one that “has its benefits paid as needed directly from the general assets of the employer or employee organization that sponsors the plan.” Plans that use employee contributions or use a trust or separate fund to hold plan assets would be considered funded, unless the welfare benefit plan with employee contributions is offered under a cafeteria plan. In that instance, the plan would be considered unfunded.

If the FSA is unfunded and has less than 100 participants the 5500 is not needed. This has been the norm for years.

This is an interesting discussion, and I do not know the answer. My guess is that it would need to be decided via regulatory or courts. But one issue I thought of that makes me believe it is not a group health plan is that it appears to be a voluntary program, and if it is voluntary then it does not meet the definition of a welfare plan...am I correct?

Wow, you have many issues here. Let’s start with the insured/self-funded issue first. What does the plan documents say about this? Level funded is a relatively new term, and some people use it loosely, when I started in 1982 we called them retrospective arrangements. But I would assume it is self-insured. As for MEWA, there is no requirement that I know of that requires contracts to be insured, now your state may be different, but I doubt it. So following that logic, and assuming it is self-insured, there is no need to follow state regulations because ERISA governs. If you are trying to exit the contract early keep in mind the self-insured contract will more than likely expose you/employer to the claims costs. Lastly, I would double check the program structure and verify that it is in fact a MEWA. A recent innovation has been the use of a captive to fund benefits. These captives have multiple employers participating. Good luck, and I am available to discuss on phone if you would like.

Pass the spatula to remove the egg on my face. Sorry, but did not read the question correctly. I read it as medical, not dependent care. So I agree with your comments, especially the last part about checking with counsel.

Sorry, but you cannot recoup the money. There is an element of risk that employers assume in return for the tax savings.

Yes, but you should check with the state laws when this is occurring. There is no single solution for this, some states are very restrictive while others are not.

Not a problem.

Got it. Thanks

Luke, thanks for the explanation, I was not even close to that answer. Do have a question for you. First off, I do not believe the group will have a 105 issue, but there is not enough info. That said, the on the face benefits test of 105 does not allow for the HCI’s to be charged less premium. Would this situation be different?

The to age 26 does not apply to retiree only plans.

I am a little confused by Luke Baileys comment, so I apologize. I do not believe Erisa bubs provided enough information to give him an answer. 105 essentially prohibits employers from providing more/better benefits to HCI. The categories of “staff and senior” are usually not acceptable. Depending on the number of employees in each there may or may not be a105 non-discrimination issue. Testing should occur and will clarify the issue. Not saying you have an issue, but you could.

HR for Me is correct, the current COBRA participants will receive the new benefit plan. COBRA is an employer requirement to extend their group plan coverage to qualified ex-employees. Do not get caught-up in plan design issues, they are irrelevant.

Never heard of this, but I do not live in California, so I cannot say with certainty. Am employer can ask you to prove your dependents are yours, via tax forms, marriage license, etc.

As a general rule, COBRA premiums are an eligible Section 125 expense. As for whether you can use the new firms FSA or HSA plan, that is up to them. Since I do not know anything about the new employers plan, it is best that you ask them if you are eligible to participate. It should be a very simple yes or no.

I am sorry, but I do not agree with Sandra. The contributions were all employee funded via a section 125 plan, thus providing a tax benefit to the participating employees. Sponsor is dealing with a variety of state and federal laws. I have always been told that these excess funds either need to be used for another benefit plan or refunded back to employee, based on their percentage contribution. This will more than likely cause a tax event.

We go through this more times than I care to remember. But my 2 cents hit the nail on the head, how can the client not have these documents? My guess is that most, if not all of the important documents have been provided to the client, they probably are unaware or forgot where they placed them. Good start would be with reviewing all emails from old tpa. Good luck.

A person can have more than 1 HSA, and contribute to them all, but the total contributions cannot exceed the annual max contribution limit.

Regs are silent about the amount, but from what I have seen if you stay below 15% you should be ok. By the way, while changes are allowed, the employer does not need to make them available. You should check the plan docs, there may be language already there.

Thanks, appreciate the help.

Keep going back to the definition of eligibility, if it says you must have x years of service and Y age, you are eligible, then whether they take the benefits under the retirement is not important.

I am a little nervous with the term "broad discretion" when referring to setting eligibility. The plan administrator/employer needs to set the eligibility requirements in such a way that it does not discriminate against a certain person/persons. If they are thinking about writing something other than "pre-65 and 10 years (or some other number of years) I would get a little nervous and ask for legal opinion.

The option to allow pre-65 retirees health coverage is standard and can be found on the employer application for coverage. If the employer decides to offer coverage to this class of employee all that is usually required is the authorization from the employer, no other information is needed. What confuses/troubles me is the wording you use regarding the addendum explaining their policy and that no reference is made to it in any plan documents. The plan documents provide the information as to who is eligible and by omission, which is not. I have not seen the various documents, so please do not take this as gospel, but based on what you have said regarding who gets it and who does not, this does appear to be a problem for the employer. Employer should make sure there is no gray area.

Chaz, thanks for the post. To my knowledge, the employer calculates a cobra cost, hopefully with the help of an actuary, and provides that number(s) to the beneficiary. What case laws are you referring to?

I do not keep up with this issue very much so it may have changed, but I do not believe so. The regs require you provide the total cost, not the specifics that go into the calculations.