jmor99

Imcccormick: What you are doing is a far, far cry from what waid10 is describing. You are talking insured contracts plus an HRA for your people. There are no insured contracts in waid10's scenario. What that employer is attempting to do is absolutely ludicrous. NO plan, no matter how small, is exempt from ERISA disclosure requirements. If nothing else, the employer is opening himself up to potential employee lawsuits, not to mention what one auto accident will do to the claims fund, or a premature baby. This is absolutely crazy! Employer not subject to COBRA? Fine. Then he's subject to state continuation laws. The gotchas go on and on. By the way, it sounds like the employer is mixing some elements of HSAs in with his "plan". Under an HSA, employees 55 or older can put in an extra $700 in 2006. Maybe this small employer is the next Bill Gates of insurance plan design. Carriers, take note!

I have seen employers go bankrupt, and the bankruptcy court required the carrier to keep the insurance in force for up to 3 months even tho there was no money to pay the carrier!

COBRA beneficiaries have to be treated the same as full time employees as far as the benefits that are available. Are the full time employees charged extra if they smoke? If so, I don't see why the surcharge couldn't be added to the COBRA premium. Of course, it should be stated up front, in the SPD, as far as how COBRA will be figured.

It seems to me that if the employer signed the CBA, then violated the terms of the agreement, then you have a case. The CBA is a part of how the plan operates. I'd say it's an ERISA case.

Hillda: Better look at the plan document. Some HRAs have a "spend down" provision (regardless of COBRA) and also may have a rollover provision. Keep in mind that an HRA is nothing more than an old fashioned MERP (medical expense reimbursement plan) like your grandfather used to have except it's been dusted off, given a new set of clothes and lipstick, added a rollover provision if desired and now it's called an HRA. Just so we can have something new under the sun. It's nothing more than another health plan (sec. 105). What does their current health plan allow? To answer, you'd have to look at the plan document. Do the same for the HRA.

No.

I hope no employers are sending HRA dollars to an insurance carrier, or TPA, etc. Isn't the whole idea behind HRAs is that "funding" is ghost money? The only dollars that should be going to the insurance carrier or TPA are the fees for admin of the program and dollars to pay incurred claims.

An employer can write their plan to state that premiums will be pre-taxed if the employee elects the benefit. In other words, you want health insurance, you pay your part with pre-tax dollars, no other choice. Under a plan like that, the only way to avoid paying with pre-tax dollars is to not take the benefit.

Might as well forget it and move on. We lost a large client because we would not authorize card swipes for the CEO and his secretary without receipts. They just went to another TPA that would. (No--he wouldn't sign a release for us). The IRS and DOL are not enforcing anything, so why should you worry anymore? I know of at least 2 persons who contacted top officials at the IRS about a TPA in this area that was in gross violations of ERISA asset trust requirements. It finally took a lawsuit from private industry to freeze the TPAs assets and force it into bankruptcy, but not before tens of thousands of people across the U.S. lost their retirement savings, FSA plan assets, HRA plan assets, HSA accounts, etc. The IRS and DOL are still no where to be found. Why Bother?

The answer is "no" for the employees who want to open their own HSA before 4/1. If they try to open an HSA with a sharp custodian, that custodian will ask the right questions and find out that the employee has first dollar coverage. (covered by an FSA with a grace period). They won't let the employee make contributions until 4/1, and then only 8/12s of the HDHP deductible.

Can anyone tell me how they are handling HSA enrollments with regard to the Patriot Act requirements? I have been told by an HSA custodian that employers can not electronically enter election form data directly into it's data base because there are questions the employee must be present to answer to the bank to open the account. Such as--your mother's maiden name, etc. If this is true, this is a huge stumbling block to data entry especially if there are numerous locations and a high level of computer illiteracy among the employees. There are numerous custodians that brag about their capability of direct data entry via "employer portals". What is the answer to this?

I don't know the answer to your first question. I'll have to wait for others more knowledgeable than I. But on the second question, I would think that the answer would depend on whether or not the plan willfully violated the law. Since this is a gray area at this point I don't think the plan could be disqualified. It also might depend on other factors, such as--was it done just for Key/HCE employees, etc.

Leevena: No. There is no claims adjudication. The TPA is merely record keeping, answering questions, etc. So the TPA is not interfering. I am talking about the type of debit card used. If I have a checking account at a bank, I can use my debit card anywhere and for anything. However, if I have a merchant limited debit card for my HSA account, I cannot use that debit card (it will not work) at non-health care related businesses. For instance, it will work at a drugstore, but not at the gas station. Is this employer interference due to the fact they selected an HSA vendor using that type of card instead of the traditional VISA/MasterCard used by your average bank?

I am aware that neither an employer nor a TPA can "adjudicate", question, deny, etc. HSA monies. There are a number of TPAs record keeping HSAs for employers whose employees have been given a merchant limited debit card (as opposed to a typical bank VISA or MasterCard). Could the use of these merchant limited cards (vendor or TPA selected by the employer) be construed as employer meddling in how the employee spent their HSA dollars?

Marie: When you fail the test, you immediately either 1)take the HCEs out, i.e., stop pre-tax deductions. OR 2) you reduce HCE contributions to the point they become non-discriminatory (you pass the test). In either case, you have to add any excess contributions back to their W-2 wages at the end of the year to ensure they pay taxes on that money. You might want to consider running the test prior to the first payroll deduction in the new plan year. That way, you can advise the HCE's whether or not they'll be able to participate and if so, to what extent BEFORE payroll deductions start.

I agree with B2kates.

Based on your limited description, this sounds like it might be a "flex credit" plan. It could be you've missed something in the SPD (per 401-kguru's post). Take a closer look at the SPD (and the plan document if necessary).

Few folks realise this but the "use it or lose it" rule applies to allof section 125, which includes the premium conversion portion. Keep in mind that once the employee gives up constructive receipt of their annual election, that money belongs to the employer, not the employee. The employee directs how that money is to be used with the election form. If the employee cancels the coverage, then it's the employer's money. The employee chose not to "use" it therefore lost it. I don't think a state will be able to negate this part of a federal law.

cebsnov: A plan can be designed to require 125 participation if the employee wants the insurance (assumes there is a cost for it, naturally). The plan can also incorporate what is known as an "evergreen" clause, which will negate the need for a new annual election (assumes the employee keeps the same coverage year after year). I can't see any connection with the SS impact.

I don't think so either. What if you have a young physician just starting out who doesn't make enough to qualify as a key employee? What is the excuse or reason for excluding him? Can you start classing out secretaries or nurses as well? Don't think so. So you have more than 1 problem here. You can't exclude them from the testing, and you can't exclude them from the plan. The particular TEST may exclude some or all of them from participation but the plan cannot class them out. Or so I think.

I think what Kristine is looking for is--Have any of you (as TPAs) been audited? I don't know of any, but I certainly know of a lot that should be, from what we've seen on takeovers.

RCR--the date of service is the key (regardless of the date paid). Your employee has no recourse.

Let's face it folks: Congress doesn't really care if HCEs don't get a tax break on daycare. The simplest way for an employer to fix this problem (assuming it's a "nagging" problem from a few HCEs), is to simply gross up the wages of the HCE to give them extra income to "replace" the tax savings they could have realised if they had been participants.

One way to take care of it is the participant asks the orthodontist to provide a per visit average--all charges totalled up and divided out equally over the anticipated time period. The orthodontist provides a "bill" at each visit, just for the participants FSA claims use. The scenario provided by Mary C is the correct one.

Answer: No