leevena

Chloe...I always thought that there needed to be some type of benefit change or cost change to allow this. Are you saying that if there were no changes to either plan, they could classify this as a life event?

This thread has addressed a few issues and products which may explain some of the confusion. The original question, and follow-ups, are about a MERP, not so much the HRA. By the way, employees cannot contribute to a HRA, it can only accept employer money. The HRA is an employer fund to pay for benefits in a self-funded arrangement.

Chloe...the way I understand this situation is that there needs to be a significant change in benefits to make this an ok event. Am I wrong?

Chaz...your are correct and incorrect. While many of these plans are inside a 125 plan, some are not. There is no requirement that they be inside a 125. If the plan accepts employee money then it becomes subject to ERISA.

You can max out the amount of money going into a HRA. For example, assume a $5,000 deductible health plan and the employer is willing to contribute $2,000 in to the HRA, with a maximum of $4,000 total of accumulation. Or you can have just the $2,000 only. There does not need to be a roll over feature. Alot of what you may or may not want to do is dependent on the strategy of the employer. For example, what level of out-of-pocket do you want to create for the employee and the employer is the first issue I would look at. The HRA allows you to develop your own list of eligible expenses covered. Usually the employer will choose to match what the health plan covers. This usually results in lower costs to the employer, where the MERP tends to raise the employer costs. What if you did a high deductible health plan (by the way, you do not need a HDHP for an HRA like you do for a HSA) with the HRA and a Section 125 program with fsa's? Seems like it might meet your clients needs and it would be easier to administer and communicate. Yes, I would recommend the employer hire someone to administer the trust.

What is in your documents for the self-funded plan? I would read these first and see if it is addressed. You can make special arrangements like a special open enrollment period as you suggest. If the employer adds a new benefit or option, you may consider it a life event. But again, please check the documents to make sure. Look at Section 125-4 rules/regs.

An "Open Enrollment" is not a life event. Is there anyting else going on that may make this different or is it just a situation where it's OE time again?

Yes, there can be employee contributions. Keep in mind that the employee contributions become plan assets. The employer needs to keep these dollars in a trust. Keep in mind these plans must 1) meet non-discrimination testing for eligibility and benefits provided, 2) have a written plan document, 3) all participants need to be employees. If I may make a suggestion. You may want to eliminate the MERP and just use the HRA and HDHP. Now, I don't know the exact details of your clients needs, but in many situations the HRA can accomplish much of what you may want to do without the additional issues you may face with the MERP.

Switching between a self-funded and a fully insured plan is not unusual. However, if I understand your situation, you may need to do some leg work ahead of time. Your question says that an employer with a self-funded plan has acquired a group (referred to as a division) that has a fully insured plan. This is telling me that there are two seperate plans for two distinct groups of employees. Beyond the paperwork to make the other plan eligible, you should review the fully insured contract with respect to required participation and enrollment levels. You could be setting up a situation that creates adverse selection for your insured plan. If this is the case, the carrier is not going to like the idea. They could do a variety of things, including, nothing, increase your costs, even cancel your coverage. This is not something you should do without significant analysis.

No, disease management is not covered. Here is a link to the fed govt site that can be a help for you in the future. http://www.dol.gov/dol/topic/health-plans/cobra.htm

These programs are not required under COBRA. If they employer would like to extend them, it could be done, but it is not required.

Out of curiosity, why would you want to wait 6 months for reimbursement? And yes, they can do this. Did he elect COBRA? If he elected COBRA he could continue until the end of the year (and then the March 15th date would be applicable). Good point, I was not even thinking about cobra. There is no mention of COBRA in the question...Robin.Wolf, is there cobra coverage?

Don't reference it. Imagine for a moment one of your employees trying to figure that out! Do an amendment to the document.

Yes, you can do that. To do a complete pro and con would be difficult, but. The biggest issue would be the additional cost incurred by the employer for the premium contributions. Without knowing your type of coverage and the risk profile of the additional participants to be covered, I cannot comment on whether the claim costs would increase or decrease. As for the pro side, you are providing a valuable coverage for people. Hope this helps.

Out of curiosity, why would you want to wait 6 months for reimbursement? And yes, they can do this.

Question #1 is confusing to me. If he has an HSA and wants to go to another non-HSA plan, he will freeze his HSA account. Is this the answer you were looking for? I don't understand your comment about it being ok because of a change in Status. Are you talking about the FSA plan? Question #2 is also a little confusing. You can have a HSA and a Section 125 plan. Are you asking about a specific piece of the 125 plan, say the unreimbursed medical? FSA's can be a limited purpose or post deductible only. Hope this answers your questions.

I would suggest checking with your carrier participation rules. Depending on the carrier, and the size of your group, you may not meet the requirements.

Masteff...It sounds like you are trying to be helpful for this person by covering all of the possible bases. May I suggest you not provide any specific advice, it may get you caught up in a bigger problem. Also, I did not say that the DHS plan requires no prior coverage, I said it might. As for your comment in the last posting...But if becoming active under the DHS plan causes ineligibility under the company's plan, wouldn't the change in eligibility for insurance be a change in status? Of course that assumes the employee would become ineligible and not that the company's plan would simply become secondary."---What do you care if she becomes active under the DHS plan and then loses company group plan or has a change in status. She is still covered by the DHS plan. Am I missing something in your question?

There are no regulations that stop an employee from dropping coverage. What in particular are you speaking about?

They can cancel the coverage, but they still need to have the premium dollars deduction from their pay. Since the plan has been canceled, the premium collected remains with the plan. You can contact the 125 administrator for help with this.

An employee may drop their insurance coverage (AFLAC) any time they would like. The premium they were having pre-taxed would still need to be collected.

Yes she can, but you may want to look at the govt plan first. Some require no current coverage, or a minimum amount of time that the person is not covered by another plan.

Yes, you are both correct in that "local" is not required. The key wording is "mass transit" types of transportation costs. Since your original question did not indicate the use of a train to get to Albany, I assumed the person was driving their personal car. I would suggest that the Amtrak costs would be eligible.

This can be a tough situation. With all due respect to the DHS staff, my initial reaction would be not to believe them. Let's assume that someone at DHS made an honest error when telling her that she will be re-enrolled and she misses the OE period. Do you think the medical carrier would allow her to enroll then? Probably not. I have seen a few similar instances over the past few years and each time the carrier would not allow them to enroll. Thats not to say that your carrier would do the same. Without knowing the exact time frames, I would suggest that she begin the enrollment for your health plan. Since you are in the OE period, it sounds like the coverage will not be starting until Nov 1 or Dec 1. This would give her some extra time to make a decision.

The HSA is available, but not the FSA.