jmor99

Regarding the cancer plan with a return of premium feature: yes, those types of cancer plans are not allowed under a 125 for the reason mentioned. However, most of the carriers are not offering those anymore or if they do, the agent advises the client/employee that those types of cancer plans must be deducted post-tax outside the 125 plan.

I think you might be OK without a document, especially if you are grossing up their pay to cover the cost of their premium. If you are requiring proof each month that they had a cost for a health plan before you reimburse them that might be a problem and is beyond my knowledge. Someone else needs to kick in here.

I am wondering, why wouldn't it be possible? It is a legitimate cost of running the plan. If it were being administered by an insurance carrier, their admin costs would either be built into the premium or would be a stated % of paid claims, etc. As long as it's reasonable and in writing, I don't see a problem.

Brobinso--my first impulse was to advise you that speech therapy is an eligible expense under a post-deductible FSA (therapy is an eligible expense as noted in publication 502). However, if the post-deductible FSA is written so that the only eligible expenses considered are those that would have applied to the HDHP deductible (in your case, speech therapy doesn't) then speech therapy is not an eligible expense. If it were to pay those expenses, that would be first dollar coverage, which violates the intent of HDHP's and post deductible FSAs. (speech therapy would be considered a core health service whereas dental and vision are treated as non-core health benefits). Therefore, as ehs suggests, require that they first meet the HDHP deductible, then pay the speech therapy thru the post-deductible FSA. I'd be interested in hearing other comments on this scenario. SLushkin: Is your companion FSA a special purpose FSA or a post-deductible FSA, or both combined? Special purpose FSAs can be set up for dental, vision, and preventive medical. Post-deductible FSAs are self explanatory. Preventive otc products would be covered under the special purpose FSA. Otherwise, all eligible otc products would be covered under the post-deductible FSA, presumably under the same scenario as with speech therapy in Brobinso's case. But yes, otc products are eligible expenses under a normal FSA. Basically, if it treats an injury or illness, it's an eligible expense. An exception would be otc vitamins, which are for general well being, not injury or illness. Regarding payment for family members' expenses, remember that FSAs and HSAs are federal tax plans that are arms-length connected to personal tax returns. In other words, if you can claim a family member as a dependent on your tax return, then you can also claim their expenses under an FSA or HSA, regardless of what kind of plan they are covered by. (Children claimed as dependents can't have an HSA. Spouses can't contribute to an HSA if they have first dollar coverage. Spouses and dependent children can benefit from the other spouses HSA)

Since this is a federal tax plan, how long do you keep tax records?

Here's my opinion: since the law won't allow more than 5,000, one of the spouses elections is null and void. 1) Get proof that the other spouse has indeed made a 5,000 election-- that might include a copy of the election form and a copy of a payroll check receipt showing the deduction. 2) Add your employees total deductions to date back to her total gross, w-2 income. 3) Put a note documenting all of this in the employee's file (in the event of an IRS audit). You MUST get proof that the spouse has indeed made the same election. Sometimes employees will tell you a tale like this just to get off the hook.

Gburns: Actually, I don't think Q&A 22 and 23 address the question here. Those Q&As have to do with receiving credit, i.e. deductible carryover credit from the previous year or previous coverage (whether on a group basis or on an individual basis) and whether or not that would effect eligibility for an HSA ( the answer being no). Their question has to do with pro-rating the minimum required deductible for a period of less than 12 months going forward. For instance, if the short plan year is to be 7/1-12/31/06, can the plans 1200 deductible be prorated to 600 and still allow contributions to an HSA? (forget about a deductible carryover from the previous year)

Since my initial post sounds so cynical, I'll add the following opinion. In my opinion, ALL health (good or bad) comes from the mind. To treat the physical is to treat the symptom not the cause. The cause is in the mind. Unfortunately, current mental health medicine has not found an efficient, economical way to deal with the cause that it professes to treat. The cold hard facts of health insurance is that it is NOT jmor insurance, it is NOT djodavis insurance, etc. It is GROUP health insurance. Thus, it is designed to serve the greatest number of people at the most acceptable, livable price. As such, it will never serve all of the needs of each unique individual. Figure out how to treat the mind efficiently, effectively and economically and you will put the rest of the medical profession out of business, at which point there will be plenty of money for mental health.

Many times these court orders state that the individual (employee) must provide health coverage for the child, in which case the employee must find coverage, and it doesn't necessarily mean the employer's plan. I have seen employers refuse to provide coverage in these situations until the annual open enrollment.

I'm shocked too. I don't see how a carrier can do this, unless it's written into the contract. Even if it's in the contract, I can't understand why any state would approve such a contract. It seems to me that the carrier is being allowed to get off the hook, which goes against all the fundamental principles of insurance. If a provision for a "buyout" really is in the contract, then there sure as h--- ought to be a stated provision for a refereed transaction, something that protects the consumers best interest. Otherwise, it's time to get the state insurance commissioner involved.

Maybe the employee, one time, could pay 2 premiums (to get ahead one month). That would at least indicate whether the employer was intentionally trying to create problems at which point there might be some legal recourse.

Question: Do you work for a TPA that charges for anti-discrimination testing? If so, then there is not much hope for your situation. The "difficulty" of running the anti-disc tests helps justify and keep revenue coming in. In fact, the tests are simple arithmetic. Most of the real work is done by the employer accumulating and sorting the data. In which case, why not train the employer on how to do them? In addition, I can't see the reason for running the tests more than once a year for groups with 50 or more employees (naturally, there could be exceptions). If a group has been passing the tests by huge margins, it is senseless to "make work". Unless, of course, you're charging.

I'll give you 2 examples of why i voted "no": Parents are having difficulty with little Johnny. One of the parents has family coverage with a company that has no nervous and mental limits. They take little johnny to the local psychiatric hospital where he is checked in for 6 weeks for "evaluation". The hospital "delays" billings to the insurance carrier (the company is self insured), so the claims don't start hitting the books until it's "too late". By the time the bills are all in, over $70,000 has hit the company's paid claims listing. Rest assured I had no trouble convincing the employer to put in Nervous and Mental limits immediately. I'm sitting in a theatre watching a movie. I can't help but overhear the conversation of 2 ladies in front of me. They're both talking about the difficulties they're having with their children and one of them advises the other to "take a vacation" by checking little Janie in at the local psychiatric clinic "for a week or two", because "your insurance will pay for it". Might as well throw in one more: Wherever I have seen not-limited mental health benefits, I have seen exceedingly high utilization. It seems that people like to spend time with their mental health counselor as much or more than they do family members AS LONG AS SOMEBODY ELSE IS PAYING FOR IT. I know of one case that went on (3 visits a week) for over 10 years, and that person was no more neurotic or whatever than you or I. But somebody else was paying for it. Furthermore, I have seen psychiatric clinics and hospitals perform miraculous cures which always seem to coincide with the moment that Larry Lunchpail's company paid benefits run out. Seems no one has figured out how to cure these folks BEFORE their benefits run out. So you wonder why health plans have nervous and mental limits? Because a greedy few ruin it for the rest.

..".............and we do not tack them........." What does "tack them" mean? To run anti-disc tests on a 125 plan you have to count every pre-tax dollar going thru it, which includes insurance premiums, FSA dollars and Day Care dollars. Additionally, there's a separate 55% test for Day Care. Running the test once a year is enough. HOWEVER--if it's a small employer, you might have to run it more often due to employee turnover or election reductions, especially if their test results are running dangerously close to the failure limit. I've seen cases on very small employers where it had to be run every time a non-key employee lowered his election (due to a qualifying event) or terminated employment.

Yes, you can start mid-month. You might want to start May 15th, for example, and end the plan on 12/31. Your plan's first plan year would be a short plan year. Generally, FSAs work best on a calendar year since most insurance carriers tabulate deductibles etc on a calendar year.

Create a short plan year for the HDHP. The HSA will kinda take care of itself because it's already on a calendar year. The ee's have been making HSA contributions since jan. 1, right? Question: did your insuranc carrier start over on the deductible on Jan. 1 or have they carried forward (from the previous 6 months--7/1-12/31)? This could be a real can of worms.

I thought there were 2 kinds of limited purpose FSAs that could be used in conjunction with an HSA. One kind allows for wellness/routine physicals/preventive first dollar coverage the other is for "after the deductible" co-insurance payments.

Kristine: Yes, it is possible for an employer to have both an FSA and an HSA. BUT: I don't think that any employee that currently has an FSA (exhausted or not) will be able to elect an HSA option until their participation in the FSA ends. When they signed the FSA election form it was for the full plan year. When that ends, then they can elect the FSA or the HSA for the new plan year. (all of this assumes of course that a HDHP will be available, to go along with the HSA option; additionally, there are what are called limited purpose and "after the deductible" FSAs which can be legally offered with HSAs, but I very much doubt that's what you're talking about here.)

wsp--yes, it could all fall under a single plan document. What you're talking about is a full-flex or true flexible benefits plan. Usually, the ee is using flex credits instead of flex dollars (the employer assigns the value of how many credits for which benefit). This is one way some employers try to hide the true cost of a benefit, or cost shift because the value is no longer tied to a dollar amount. Assigning flex credit values to a benefit can be tough for a small employer to do if there is no correlation to actual $ values. Yes, client can go to a single administrator for this. As to an RFP breaking down costs by offering, I believe you could look at a typical RFP for typical 125 plans and the costs should be about the same. However, I don't think there are that many smaller TPAs that have systems that would/could manage vacation days, etc. Most are used to doing POP, MedRe, DCAP, Parking, etc. One software vendor to a lot of TPAs is P&W Software of California. I think their system will administer flex credits. I'm sure there are plenty of others. Check with the ECFC. They have a list of vendors if I'm not mistaken. You could then check with the vendor for a TPA in your area using their system.

States which do not allow HSA tax breaks can be bypassed by running the contribution thru a 125 plan. Is this a true statement? Doesn't sound acceptable to me but not sure.

But Don: Somewhere, the employer is making contributions, either in the form of "401-k match" characteristics OR in the form of higher (or lower) health plan coverage, tied to the VEBA balances.

Julie: You can cancel your health insurance--but you cannot stop the payroll deduction for it (for reasons given above.)

Your quote uses the phrase "and optionally, mail order coverage.....". The word optionally would indicate that mail order coverage is not necessary.

Does the SPD expand on this in any form?

Even though there may be nothing available officially yet, I recall seeing some major activity (within the last 3 months) by some of the top national corporations regarding a coalition they had formed to work out benefits for part time employees. Avon was one, I think. If I recall correctly, some of the things they were condsidering included providing enough money to allow routine physicals, doctors office visits (up to a max.) etc.