leevena

As I understand it, the third party requesting the information is involved in potential litigation possibly involving the three individuals (that is, if they participated in the plan). The plan wants to inform the third party that the three are not participants to put the matter to bed from the plan's perspective. One solution is to just inform the third party of the eligibility requirements for plan participation (e.g., from which the third party can determine that Donald Trump is not eligible) but I am trying to determine whether telling the third party straight out is okay. I am not a lawyer, and I don't play one on a tv show, but it seems to me that this should be done through their attorney. Remember something about PHI, just because the information is PHI, does not mean you cannot disclose that information. It just needs to be disclosed as described in the law. Again, since this involves potential litigation, you should let the attorney's handle this.

As long as the group meets the requriements for COBRA, and they individual also meets the requriements, it makes no difference that they are temp. Here is a link for you that may be of help. http://www.dol.gov/dol/topic/health-plans/cobra.htm

PHI is PHI, whether enrolled in a health plan or not. I am not sure what the group is trying to do, but it sounds like the group is trying to communicate that 3 individuals are not eligible for their health plan and that these 3 individuals have never been on the health plan, is that true? If that is the case, why not just send the eligible list the tpa and they can use that.

It's hard to say. The employee can certainly opt out, but as you can imagine, the risk is if the employee becomes unhappy with the new coverage, blames the employer, obtains legal representation, and points to the cash payment that is being given in lieu of the coverage.

Your comment about this being done often is probably correct, and usually some kind of $ deal is done. The key is how informed was the employee about the new plan and was it a better option. If the employee opted out of the group plan and into this individual plan offered by the broker and it turned out that the group plan was better, there will be a problem. I have no specific information about the benefit designs, costs, or health of the employee, so I cannot say with certainty if this is a good idea. But I would urge caution and make sure that a full exploration of the benefit levels and implications is undertaken before this occurs. As for your question about payment, usually best to reveiw with CPA or other financial professional.

The original question, #1, does not mention the use of a cafeteria plan. I assumed the two questions were about two different clients,one with a plan, one without a plan. Good point, don't know if my assumption is right or wrong.

I am sorry, maybe I confused the issue with my answer. I did not think that was the question you were asking. Your first question was "1. A client wants to give its salaried ees $1,000 cash (taxable) if they do not choose the er's health care plan, but does not want to do the same for its hourly ees. Is there a potential nondiscrimination issue?" There is no mention of a 125 plan, so I assumed the employer wanted to give some ee's the money to drop the health plan. Again, if the group has bonafide groups, such as "salaried" and "non-salaried", it is ok. My issue about falling below participation levels still is a concern, depending on the size of your group and the opt-outs. As for the second question "2. A client wants to amend its 125 plan to give lower paid ees higher paid benefits than its higher paid ees. Any issues?", I mis-read this. I read "give higher paid ee's higher paid benefits", sorry. This is ok, and may in fact help with your 125 testing. Again, sorry for my confusion.

Your question asks about the legality of offering coverage to these dependents, which is not the question. You should be asking if your plan allows for their coverage. You should check the plan definition of eligible dependents first. You may have some type of unique arrangement for this situation. However, as a rule of thumb, the children of the domestic partner can be covered if they meet plan eligibility (age, in school, etc.) and the domestic partner has custody of them. If the domestic partner has children from a previous relationship, but they are not in the custody of this person, they will usually be defined as not eligible.

Rule of thumb is simple, you cannot discriminate within a recognized group of employees. So, if you have two bonafide groups of employees, you can do for one and not the other. As for the incentives, two things immediatly come to my mind. The first is the extra money to get employees out of the health plan. Need to be careful not to fall below any participation levels. The second is the incentive may end up causing your 125 plan to fail testing. You may want to analyze how many may take advantage of this and see how it affects the testing. Good luck.

You are partially correct. HRA's are subject to COBRA, both the insurance plan and the side-fund. To determine the premium amount the employer must use either an actuarially determined formula or a "past-cost" formula. Since this is a new group, it does not have past experience to use so it must use an actuarially determined formula. The formula may lead to a less than $10 contribution. As for the example you have outlined, are you saying that the account balance is $150, but since there is two spouses on the plan, the fund is then doubled, so that each has $150? In a situation where a cobra event occured with a non-single contract (+spouse or family), there is no additional amount set aside for the other, such as an additional $150. Rather, the amount in the fund is for both of them. They continue to receive the employer contributions. Expenses are reimbursed for participants only. So if you have a single employee only, that employee cannot use HRA funds for the non-covered dependent. Good luck.

An HRA is ok for your client. The business sets up a self-insured account for the employees to use to pay eligible medical expenses with. Employee money cannot be used to fund the account. To get further information either speak with your broker, or just google Health Reimbursment Arrangements, there is plenty on the web.

Thats another story, sorry, but I did not even consider that from your earlier posts. I assumed that the due dilligence had been done and that all sides were satisfied. The analysis should be done from a variety of perspectives. To begin with, are you purchasing everything (lives, administration, staff) or just some part? We know you are looking at purchasing the lives, so let's start there. The lives you are purchasing/merging are really "risks", that need to be evaluated and an expected medical cost calculated. If the group has a higher than average risk the medical costs may be higher than you expected. Best way to determine this is to have an actuary review the risk. Your biggest concern may be the large claims and the potential longer term effects they may have on your costs. An additional financial issue to consider is the actual block of business you are purchasing and if it will still be there after the sale. I don't know the particular of your fund, but will some of them leave? Let me give you an example. A few years ago I was with a health plan that sold everything (book of business, staff, buildings, etc) to another health plan. We had to calculate what level of membership would be there after the sale. It did drop, about 30%. Needless to say, the purchaser was very upset, but my analysis of membership did include a potential for that level of loss. You should also pay attention to non-financials, such as administration, buildings, staff, etc. that might be in the deal. The smaller fund may have staff, buildings/rent, computers, software, etc. that might be included in the purchase/merger. Before doing an evaluation of their costs, you should do an evaluation of your own capabilities and determine if you (larger fund) could accomplish the tasks without their resources. Pay particular attention to hidden costs, such as lease agreements, service agreements, employement contracts, beneift contracts, etc. From the trustee perspective, how does this affect them? Will the small fund request/require a seat, or some kind of influence? There is much more to consider, but this should get you started. Good luck, Lee

There are many issues that need to be addressed, and I am sure that I am not going to touch all of them, but I'll try my best. 1. Communication of the new benefits to the smaller group losing their benefit. 2. Coordinate the claim payment for ongoing claims of the smaller group. 3. Loading the smaller group enrollment/eligibility information into the larger group systems. 4. If you have Stop Loss, notify them, they may or maynot make changes. 5. Notify any outside vendors (PBM, etc) that you may be working with. 6. Coordinate any COBRA participants. 7. Coordinate any participants not actively at work. 8. Review plan documents for the larger group to identify any issues that may arise, and make changes if needed. 9. What about the provider networks from the smaller group, can they be accepted into the new larger plan? 10. Need to make reserve calculations for the new group. 11. Get the participants from the smaller group new cards, booklets, etc. Like I said, I don't think this is an exhaustive list, but it should get you started.

Could you clarify some more please? Are you closing one plan and placing the participants in the other plan? Are you closing both and creating a new plan? Are you trying to merge the two into one plan? Any additional information would be great.

Sorry, but a little confused. When you ask "what can the ER do to minimize liability", what do you care, same risk as before, right? THe employee contributes to the FSA, so it is their money. Also, you only need to run the FSA through the plan year it was offered. Does this answer your question?

This may be a slippery slope that the employer may not want to go down. When you start to allow employees to opt out of group health plans, the integrity of the group starts to suffer. Remember, health plans require some kind of participation level of eligible employees. If the group falls below the participation levels it does run the risk of losing coverage all together. What if other healthy employees find out, cut the same deal, and then participation drops below. What you have is a sick group that cannot get coverage. Editorial aside. You may want to get the company's financial people, or outside CPA, to make the decision on how to structure the contribution. It is usually better to give it in compensation, which may cause a tax event for the employee. As a suggestion, is there anyway you can offer a variety of health plan options via the group plan? I am in California and many plans allow employers to select a variety of options (HMO, PPO, HSA, etc) to be offered to the employees. If this is the case, then the employer can avoid some headaches.

Sorry, but I do not know what you mean by "How does/should the ER handle this?" Are you asking if the ex is eligible? Divorce is a qualifing event, so the ex is entitled to cobra. There are some nuances depending on if the fsa is excepted from HIPAA.

Yes. It allows each side to decide between themselves who will be responsible for cobra. Usually the seller is responsible, but it could fall to the buyer if seller does not follow through with their part. This is obviously a unique and rare situation and I would recommend that legal counsel be brought into this, most people are clueless about this process.

There are a couple of things you can do. First, ask your health plan broker if he has one for you. These are relatively cheap and many brokers give them to clients for free. What I like about them is that they contain everything; background information, letters, billing, etc. A second option, which is less desireable, is to use a billing software that you can purchase at any software store.

No need to pay for January, since they have 30 days. Payment schedule is relatively simple, just show them them individual monthly dates of service with the cost for that period, then aggregate it to total due. If you do not have a software program for cobra, you may want to purchase one to make all of this easier in the future.

The link I posted in the above response can help you too. The initial premium payment must be made within 45 days after the date of the COBRA election by the qualified beneficiary. Payment generally must cover the period of coverage from the date of COBRA election retroactive to the date of the loss of coverage due to the qualifying event. Premiums for successive periods of coverage are due on the date stated in the plan with a minimum 30-day grace period for payments. Hope this answers your question.

The individual has 60 days to decide whether to elect COBRA continuation coverage. (This 60 day period allows for the employee to change their election as many times as they would like). The person then has 45 days after electing coverage to pay the initial premium. Using your example, they "elected" coverage on Day 1 (Aug 1), but have 60 days to change their mind. August 1 premium is due, but there is a 45-day period for them to pay, which is September 15. Therefore only August premium is due at this time. (There is a provision that allows for COBRA participants to pay less than the 100% due and still be covered, but let's not bring that into play for this example). Now the curve ball. Since this person has 60 days to choose, they can change their mind, tell you they do not want COBRA, and then on the 60th day (Oct 1) elect coverage. If I may make a suggestion, you may want to invest in either a cobra software package or have an outside firm do it for you. COBRA is still an employer risk, but either route should help you. Your health insurance broker should be able to direct you to the best alternative based on your needs. Here is a good website to visit for information http://www.dol.gov/dol/topic/health-plans/cobra.htm Good luck.

Yes, it must be in writing and made available to participants.

They are eligible to participate. The issue/concern you should have is focused on testing. Smaller employers tend to have more difficulty in passing the tests.

I can think of two ways. First is to find a local association (health underwriters, ebc, etc.) with the members who have the traits you are looking for in a partner. You can attend meetings and get to know them, and use networking skills. As for boards like this, it might help if you gave more detailed information, such as what city/area you live in. There may be someone on this board that would be interested, but has no idea where you are. Good luck with your new endeavor.