leevena

Don't understand your question, what is meant by "2 components under the same caf. plan?" It sounds like you have a caf plan with just premium conversion, not any reimbursement fsa's. What are you looking to do by adding an HSA to the caf. plan?

If you are leasing employees, they are not yours...correct? If they are not yours, why would you worry about 105?

Hi. Yes, otc can be run through the hsa plan. See IRS publication 969, page 6, subsection entitled "Qualified medical expenses", which states, "qualified medical expenses are those expenses that would generally qualify for the medical and dental expenses deduction. (These are in Pub 502) Medical and Dental expenses examples innclude amounts paid for doctors fees, prescription and non-presciption medicines, and necessary hospital services not paid by insurance. Good luck.

George is right. Based on the way the question was worded and that a cpa was being used, I was not even thinking that the group could be structed that way, I assumed that the business was not a pass through. Thanks

Hello fellow SoCal. Obtaining benefits should not be that much of a problem for you, assuming the employees are on the books and being paid. Small Groups 2-50 are guaranteed issue in California, so you do not really need to look for anything special. As for whether to use a broker or not, that is up to you. My suggestion would be to use one. Two reasons come to mind. The first is that rates/benefits do not change whether you go direct or use a broker. The second is that is appears from your question that you do not have anyone on staff who has the background to review all the options available to you. So since it will not cost you to use a broker, go ahead and use one. As for how to decide, that is up to what you are looking for in a broker. Again, looking at your question, you may want someone who can evaluate all of the options available and make a recommendation based on what your requirements/needs are. If a broker is just going to shop price, I would stay away from them. Good luck.

Yes, your correct about the hce vs non-hce. Can't say for sure if you have a problem with the first part, that being the issue of different class of employees. Good luck.

You are essentially right. There can be different level of premium contributions if there are different class's of employees. You can treat seperate classifications differently, but you cannot treat employees in one classification differently. As for the Section 125 test, you look to be ok. The test compares dollars used by the HCE vs the non-HCE, and since the HCE's have no premium payments the test would show that the non-HCE's are receiving 100% of the benefit. As for who can do the test for you, there are a variety of outlets. I would check with your broker/consultant who sold this to you. Sources include the 125 administrator or an attorney.

I have been using a formula (in California) that estimates the expected claim use of the HRA. It uses a formula that compares the risk for a specific group to the risk for a larger and more credible group, which is actually based on BCBS national numbers. It then does some adjustments for local costs, benefit changes and other things. However, what I have found is that if the group is somewhat normal age, sex, etc. demographic, it usually calculates the expected HRA cost at 60% of the maximum. We have been using this until we are able to develop a better estimation based on the groups' own experience.

Oh, now I see your point. Don't know the answer to that. You should ask your administrator or plan consultant to research that.

Your example of the divorce/kid graduates is a little confusing. The $5,000 HRA fund is owned by the employee and follows that employee into COBRA. There could not be another $5,000 fund for the spouse/kid. Where would that additional $5,000 come from? As for the child graduating, if the child is still eligible and covered under the COBRA plan with the COBRA employee, then the monies can be used for that child's expenses. If the child is not covered, then the expenses are not eligible for the HRA reimbursement. As for a divorce, I have no idea what would happen to that HRA fund. Seems to me that it is a legal question that would be left up to the attorneys at time of seperation/divorce. I would be interested in knowing this answer.

Seems to me that you can avoid the excess problem if you divide your yearly contribution by 26. For example, if your company is contributing $1200 per year, have each paycheck deduction calculated at the $46 rate. That way you stay within the guidelines.

You can offer different groups of employees different benefits as you described, as long as these "different groups" are viewed as legal. For example, union/non-union, full-time/part-time, 2 different divisions of a company, etc. As for the Federal HMO act, I do not believe it is relevant. (In fact, I don't even know if it is still around) This law essentially required employers to offer a federally qualified HMO to their employees. There were some caveats, such as the HMO was required to deliver a written notification some 6 mos prior to renewal; the HMO had to have a similar employer contribution % or level, and some other things.

Just thought of something after I signed out of the last reply. You stated that the survey was through a 3rd party vendor and that the information would not be shared with your employer. What if you completed it with incorrect information? That way you provided them with a response, kept your coverage eligibility, and did not give them any personal information. I would not go overboard with the information, just keep it simple and believable.

This is the strangest thing I have ever heard in my 25 years in this business. I believe that the bottom line is that the employer cannot base eligibility on the completion of the survey. That said, I am not an attorney, so I am not an authority. As for allowing you to continue as a COBRA, there are many outstanding questions, such as is there a limit on the time you could be a COBRA participant? If that is the case, you are only delaying the real problem of no coverage. As for the HIPAA question, I don't believe HIPAA applies to this type of scenario. It essenntially requires that certain types of personal information be kept confidential and only used for certain things. Since your survey is to be kept confidential, it may not violate the law. You might want to search out a legal opinion.

I don't know your situation in full, but I'll give you some feedback as comments. 1. You need to be covered under the plan in order to be eligible for COBRA. Sounds like you may not be covered yet. (Your question indicates that your are currently enrolled and it indicates that you cannot enroll.) 2. Never heard of being required to take a health survey in order to be eligible. Does this mean the employer has developed a survey for their own use, or is this an underwriting form that the carrier is requiring? Underwriting form could be required if allowed in your state, but an employer survey as part of eligibility is something I have never heard of. 3. Some states have taken on "state cobra" coverage requirements. Depending on where you are and what size your employer group is, there may be other issues. Good luck.

I agree with the earlier comments, that the manner in which the payment was made is ok. I am a little confused about the issue surrounding the format in which the "expense" is being submitted. There should be an itemized receipt that would clearly show the cost of the item purchased. That amount is what should be reimbursed, not the amount of the gift certificate.

We run into this all the time. No matter how much preplanning is done, there always seems to be someone out of the area, and sometimes out of the country. You can either use a fax machine, email the documents to them, or use the old fashion mail. It can be done relatively easily. With today's technology, I can't believe that someone is not available.

I agree with all the earlier comments. However, you may want to read your plan contract and see if it require's an annual open enrollment to take place.

I don't think an irrational decision was made here and your analogy to selecting a managed care plan without knowing about the provider panel is not accurate either. As I mentioned in the my original posting, there is some information available, but as most industry people will admit, there needs to be more. I am searching for those additional sources of information now.

I am looking for information/data for the employees to use. These employees are usually leaving managed care plans that essentially steered them through the medical system and made most of the decisions for them. Now with HRA's and HSA's the employee needs to become a better consumer of health care. Where can they go to become more informed about health care, expenses, etc. For example, if one is to have a gall bladder operation a 24 hour stay with a per diem cost is better than a 23 hour stay with fee for service costs.

These are all really good comments and thoughts. My comments earlier about this being a problem was coming from another perspective, or so I believe. This situation involves an employee who is out on disability and unable to work. The issue I was addressing is not the payment of premiums, but a " new benefit" which appears to be available to only a certain employee. It seems to me that if another employee was to become disabled, asked for this same benefit, and was denied, the employer would have a discrimination problem. I look forward to hearing the final on this one.

Sounds like the employer has a problem. You identified the key issue in your comments, that being does the employer have a formal policy and is it available to all other employees in the same class. Good luck.

I think this is very nice gesture on behalf of the HCE's, but not the best option available. I agree with MBOZEK that this does create a taxable event. Addtionally, it might even create unforseen issues with moral and relationships with the employees. You will now have "better off" employees "helping" those with less. Seems like a receipe with some substantial problems. Without knowing much of the detail, it seems like you have a fairly standard issue, that of the employee costs beginning to be too much for them to fund. And, as time goes on, you may start to have participation problems. I would look at other alternatives before ever thinking about what you are proposing now. Can you reduce the benefits available? Can you reduce salaries and redirect those dollars to benefits? Are all the possible cost reductions in place? Good luck.

I am looking for additional sources of information for my clients who enroll in either a HRA or HSA. Right now I can direct them to the carrier, but that information is somewhat limited. Does anyone know of sites, or even products/services I can purchase to help?

JD is correct, you take the deduction off on your tax return. However, not all state's allow this deduction. If you do not know if your state allows this deduction, and do not know how to research, look on the tax return and see if there is a line for HSA deduction.