leevena

Mike is correct, more facts are needed. Fully insured medical is not subject to 105. Self funded and Section 125 are subject to discrimination testing, but depending on the facts, this situation might pass.

My guess would be that her clients want to know what plans are in place should continuity become an issue. The client is asking what is in place should continuity become an issue so that their plans continue to operate.

A fully insured plan is given a fixed rate, let’s use single only, and let’s use $800. A self-Funded plan is provided with costs that are broken out, by way of example; $200 administration, $500 expected claims and a maximum claim cost of $600 (500x120%=600). I have seen employers using Single at $700 (expected) and others at $800 (maximum).

Since the numbers you have from the employer are correct then I am at a loss. Could be a mistake. If I were you I would ask the question to both the PEO and employer. Do it in writing/email to have a trail. Something came to my mind, and it’s a stretch, but you mentioned the cobra costs are about 20% higher. 20% is a common stop-loss level. Is it possible you are looking at costs at an expected level and not adding in the agg?

Self funded plans have 2 methods of calculating cobra; actuarial basis and past cost basis. Over the years I have heard/read of some PEO’s, and others, calculating much higher cobra rates either mistakingly or by accident. Keep in mind, I am not saying this is what is occurring. Are you confident that the numbers you have are correct? Especially if this is a self-funded plan which could have their costs broken out. Other than these options, I am out of ideas.

Without additional information it is difficult to determine, but 2 possibilities are; the cobra rates for disabled can be 150% and the medical plan can be self funded.

Does this help? https://www.irs.gov/pub/irs-pdf/p969.pdf

I do not believe that is correct. The wording found in IRS documents is period of coverage, not date of termination of employment. To be fair, there are many situations where the date of employment termination is also the date that the coverage period ends too.

Yes they can, and the dirty little secret is they have been doing it for years. I have provided a link to Tenet Hospital policy for your review. https://www.tenethealth.com/docs/default-source/provided-without-financial-incentives/policy---comp-rcc_4-55_payment_of_patient_insurance_premiums.pdf?sfvrsn=740a2db7_4

Sorry to hear about your situation. I have never heard of such a situation. The “use it or lose it” rule is applicable to a FSA, just want to confirm you are saying this happened to your HSA, correct? I would continue by calling both HR departments and get clarification or more information. By the way, your first HSA vendor should have the information in their records, ask to speak to a supervisor. Also, you should have been provided with your own account, did you log in and review?

Thank you so much.

Are you seeing states requiring coverage of furloughed employees? Thanks

Most times this can be done. Whether fully insured or self insured, the employer needs to work backwards and verify with all the vendors that this is allowable.

We are in the health benefits space, and 100% of our staff is working from home.

Or, the employer simply announces that the employees may have come into contact with someone who may have the virus.

Any excess funds can be retained by the employer, but must be used for benefits. Most will use these monies to offset future plan costs.

Your post is not very clear, especially your comment about basically treating the severance payments. Which is it? I feel like there is something more to this question. If the ex employee is benefit eligible you should allow them to payroll deduct.

I agree with Chaz in that you may need counsel. What does interest me is the issue of the forms used for employee waivers, which were never made available. It is possible that the plan was structured so that all eligible employees would be required to participate unless they submitted the waiver. If this were true, it does not matter if the employees say they refused coverage, they needed to do so via the waiver form. It does not matter that the employee did not want to participate, nor that no benefits were ever paid out on these individuals. If this were me I would want to also view the plan documents and any administrative documents. Good luck.

Belgarth, employers can make tax-free contributions either way. If made without a 125 plan the contributions must meet the comparability rules, which is simple. Same dollar amount or same percentage of deductible for ee’s in same coverage category. If made thru a 125 plan there are non-discrimination rules. Based on the information you have supplied, it does not appear to make sense to use a 125 plan. please see www.irs.gov/publication/p969.

Not all groups are subject to Erisa. Should have thought of this earlier. Is your employer exempt?

Lucy, I do not mean to be argumentative, but you are not providing sufficient answers/information to the replies. Do you provide them with an spd at any time? By law you must. If yes, why are they asking for more benefit information? The spd has the most details. If you are not providing an spd, you need to remedy this immediately.

I agree with ESOP Guy, little vague. Here is the IRS wording, at Group Term Life Insurance. Total Amount of Coverage IRC section 79 provides an exclusion for the first $50,000 of group-term life insurance coverage provided under a policy carried directly or indirectly by an employer. There are no tax consequences if the total amount of such policies does not exceed $50,000. The imputed cost of coverage in excess of $50,000 must be included in income, using the IRS Premium Table, and are subject to social security and Medicare taxes. Carried Directly or Indirectly by the Employer A taxable fringe benefit arises if coverage exceeds $50,000 and the policy is considered carried directly or indirectly by the employer. A policy is considered carried directly or indirectly by the employer if: The employer pays any cost of the life insurance, or The employer arranges for the premium payments and the premiums paid by at least one employee subsidize those paid by at least one other employee (the “straddle” rule). The determination of whether the premium charges straddle the costs is based on the IRS Premium Table rates, not the actual cost. You can view the Premium Table in the group-term life insurance discussion in Publication 15-B. Because the employer is affecting the premium cost through its subsidizing and/or redistributing role, there is a benefit to employees. This benefit is taxable even if the employees are paying the full cost they are charged. You must calculate the taxable portion of the premiums for coverage that exceeds $50,000. Not Carried Directly or Indirectly by the Employer A policy that is not considered carried directly or indirectly by the employer has no tax consequences to the employee. Because the employees are paying the cost and the employer is not redistributing the cost of the premiums through an insurance system, the employer has no reporting requirements. Example 1 - All employees for Employer X are in the 40 to 44 year age group. According to the IRS Premium Table, the cost per thousand is .10. The employer pays the full cost of the insurance. If at least one employee is charged more than .10 per thousand of coverage, and at least one is charged less than .10, the coverage is considered carried by the employer. Therefore, each employee is subject to social security and Medicare tax on the cost of coverage over $50,000. Example 2 - The facts are the same as Example 1, except all employees are charged the same rate, which is set by the third-party insurer. The employer pays nothing toward the cost. Therefore there is no taxable income to the employees. It does not matter what the rate is, as the employer does not subsidize the cost or redistribute it between employees. Coverage Provided by More Than One Insurer Generally, if there is more than one policy from the same insurer providing coverage to employees, a combined test is used to determine whether it is carried directly or indirectly by the employer. However, the Regulations provide exceptions that allow the policies to be tested separately if the costs and coverage can be clearly allocated between the two policies. See Regulation 1.79 for more information. If coverage is provided by more than one insurer, each policy must be tested separately to determine whether it is carried directly or indirectly by the employer. Coverage for Spouse and Dependents The cost of employer-provided group-term life insurance on the life of an employee’s spouse or dependent, paid by the employer, is not taxable to the employee if the face amount of the coverage does not exceed $2,000. This coverage is excluded as a de minimis fringe benefit. Whether a benefit provided is considered de minimis depends on all the facts and circumstances. In some cases, an amount greater than $2,000 of coverage could be considered a de minimis benefit. See Notice 89-110 for more information. If part of the coverage for a spouse or dependents is taxable, the same Premium Table is used as for the employee. The entire amount is taxable, not just the amount that exceeds $2,000. Example 3 - A 47-year old employee receives $40,000 of coverage per year under a policy carried directly or indirectly by her employer. She is also entitled to $100,000 of optional insurance at her own expense. This amount is also considered carried by the employer. The cost of $10,000 of this amount is excludable; the cost of the remaining $90,000 is included in income. If the optional policy were not considered carried by the employer, none of the $100,000 coverage would be

I agree. I believe there would be imputed income on employee paid life that is provided by the employer.

Yes

Why would they not provide it? By the way, what is your interest in this? I noticed you are new to the forum, are you an employee being denied information?