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Add back to Box 1 earnings : 401(k) and/or 403(b) contributions from Box 12 (Codes D and E) Section 125 Contributions reported in Box 14 (if provided) Subtract GTL in Box 12 Code C

I agree. I wasn't part of the ASPPA Linked In Group, but was in several payroll professionals groups. Coincidentally, I removed myself from email notifications for all of them this morning. There was no value in the space they were taking up in my in-box. I much prefer the BenefitsLink format and the listserv format for the American Payroll Association.

Since it is so early in the year (assuming calendar year = plan year), and the confusing enrollment process,your employer may be willing to allow you to undo/revise your election.

See IRS Pub. 502 for a discussion on this topic.

Doesn't sound like a qualifying event to me. And the credit history reason doesn't sit well with me. We sometimes get notification that an employee has not provided required documentation (Patriot Act) for their HSA account to be opened. HR handles this but I think their practice is to enroll the employee in the HRA instead of the HSA when this happens and the employee is not able to crrect the situation.

Perhaps to avoid being defaulted. If the plan has a rule that you can't have another loan once you've defaulted it could be an issue. The hardship distribution also removes the requirement for repayment - which seems to be the issue for this employee. But I agree with those questioning how an employee can "decide to default" since payments are usually via payroll deduction...

#1 - The payroll software may be able to stop the withholding when it reaches $1000.00. If it can't, why not let the employee elect $1000.08 ? maybe employer has a $1000 limit ? #2 - All employees should have been told about open enrollment for this benefit . Not sure what the penalties for non-compliance with plan document are.......

Yes but he can't get reimbursements for anything incurred prior to November 2011 - only expnses incurred since the HSA was established. From IRS Pub. 969: "For HSA purposes, expenses incurred before you establish your HSA are not qualified medical expenses. State law determines when an HSA is established. An HSA that is funded by amounts rolled over from an Archer MSA or another HSA is established on the date the prior account was established. "

What they are telling you is to run the money you already owe through the HSA before you use it to pay the PT to lower your tax bill. Since you have to pay it anyway, you might as well get the tax break for paying it. How much of a tax break? Are we talking $5.00 or $2,000? Whatever your tax rate is - 15% is the lowest Federal bracket, no ? Also, you should save any applicable state income tax on it. It could be a couple hundred dollars in savings. If you haven't already paid the medical bills, you could deposit the money in an HSA and then cut the checks from that account. But - be sure that your insurance is HSA Eligible before you do that. You stated that the Explanation of Benefits said that the insurance would pay 100% and an HSA eligible HDHP would not have that first dollar coverage. You have to decide if its worth going thru all the hoops to save on your taxes. Also, IIRC correctly, you can't file a 1040EZ if you have an HSA. If that is the case, your tax prep process might change.

There was a discussion on this site on this topic within the past 2 weeks. Try checking the HSA forum or searching for "HSA"

I think you need to contact the insurance company and have them explain the EOB to you. They should not be paying anything until you have incurred over $3000 in expenses. The only exception is for preventive care. Since you will have to pay this bill for the orthopedic visit and the PT, you should open an HSA and start funding it. Then you can pay your bills with tax-exempt money. You don't have to fund the entire deductible - just deposit what you are going to pay to the providers. By going thru this step, you can save the federal (and state) income tax on those medical bills. If you google "HSA Bank Account" you will find some providers who offer HSA accounts. For example, my search turned up Bank of America and Chase, among others, which list "HSA's for Individuals" as one of their products.

I never set up the HSA portion. I don't know how, nor was told how. Further more, I can't contribute to start one, I don't make enough money, and I don't have any benefits from my employer (I am the only full time employee). What is the $60 you are paying per month for ? Is that the premium for the medical insurance ? You should talk to your insurance guy and make sure that the plan is HSA Eligible (an HDHP - or High Deductible Health Plan) before you open an HSA at your bank. Not every plan with a high deductible is an HDHP that is HSA eligible. You may just have a plan with a high deductible for certain events such as being hospitalized. Try to get a copy of the policy - or even better, the material they give you when they try to sell it to you. That might have a good summary that you can start with.

I would like to add to Masteff's excellent response that there is nothing in PPACA that I am aware of that would change this. The purpose of the TEFRA rule was to push the cost of medical coverage for actively employed individuals over 65 back onto their employers. I doubt that anything in PPACA would undo that. I too was a law firm business manager. Many of the partners, who had to pay the entire cost of their medical coverage, would opt out of the group coverage and purchase a Medigap policy on their own.

I stand corrected. It is the HSA participation, not the HDHP, that restricts the FSA participation. We actually advance the employer HSA contributions for those who have a documented need early in the year. But if you work for a company that doesn't fund the HSA, an employee who knows they are going to have a need early in the year may be able to use the FSA to pay the deductible - if the FSA document allows that.

The insurance contract could be revised to allow this coverage. If your employees contribute a portion of the premium, you could consider charging those who work 20- 30 hour a week more than those who work 30 hours . Even if you don't have contributions now, you could establish them for the part-timers.

What about the reverse situation? I'm on an HDHP plan through employer but have chosen not to open or fund an H.S.A. account. Can I contribute to a'regular' FSA (not Limited) also offered by my employer (who has given me okay to do so)? I have triplets and one of them requires surgery on January 4th. The bonus of FSA is all funds are available right away, while HSA funds are like bank account. In addition I may be leaving the country (and therefore my employer) in June. Thanks in advance. I'm pretty sure the answer to this scenario is also "No". If you are in an HDHP, you can only have a limited purpose FSA. Are there other options you can pursue such as a loan or a hardship distribution from a 401(k) ?

Thanks. It's not my choice to make. I guess it all depends on the employee population. When I worked for the law firm, they would have been po'd if their elections expired . The opposite scenario is more likely at my current employer - not understanding that it was a standing election.

Once you retire and are no longer on your employer's medical plan, you can use your HSA funds to pay Medicare Part B premiums.

Maybe the child won't be born until 1/1/12. Employee loses the tax deduction for this year, but is able to include hospital expenses in the FSA election amount for 2012.

Why ? What are the issues ? Thanks

If he were to enroll in the HDHP (I'm assuming the stipulation that he must qualify under the HSA rules is employer imposed) he would not be able to contribute to an HSA as long as he was eligible under the full FSA. The relocation isn't a qualifying event to change his FSA election so that will remain in effect until the end of the plan year. Are you sure that the relocation (change in work site) is not a qualifying event for a change to the FSA ? (iii) Employment status. Any of the following events that change the employment status of the employee, the employee’s spouse, or the employee’s dependent: a termination or commencement of employment; a strike or lockout; a commencement of or return from an unpaid leave of absence; and a change in worksite. In addition, if the eligibility conditions of the cafeteria plan or other employee benefit plan of the employer of the employee, spouse, or dependent depend on the employment status of that individual and there is a change in that individual’s employment status with the consequence that the individual becomes (or ceases to be) eligible under the plan, then that change constitutes a change in employment under this paragraph © (e.g., if a plan only applies to salaried employees and an employee switches from salaried to hourly-paid with the consequence that the employee ceases to be eligible for the plan, then that change constitutes a change in employment status under this paragraph ©(2)(iii)).

As I understand the rules, this would be a qualifying event for a participant to add the new spouse. This employee is not a participant, so must wait until open enrollment. Or enroll in new spouses' employer's plan, if any.

Hi Susan Here's a good article on this subject. It also discusses options for employees over 65 who have covered spouses under 65. http://www.benefitspro.com/2011/04/19/loom...as-and-medicare

Won't she also run afoul of TEFRA by not offering health insurance to actively employeds over 65 ?

True, but might be the lesser of evils. I wonder about the circumstances surrounding the plan termination. This appears to be a very large policy, perhaps for an owner; is there a change of ownership? If the idea is to get rid of the MPP might it better be simply restated as a PSP? Otherwise Bill Presson's suggestion of borrowing out some or most of the cash value before distributing or buying the policy is good, just be careful because a stripped-out policy can be expensive to maintain. (When I was new to the business, I asked my boss, a life insurance salesman/TPA "why should life insurance be in a qualified plan?" His answer: "To make a commission." That is really the only reason; it pretty much stinks at the end of the road for the participant.) Yes, the company is being shut down and merged with a hospital group, so there will be no restatement. The few doctors that have policies and need to keep the coverage are just considering to keep the plan frozen and pay the annual admin fees. Technically the practice will be in existence for the next 5 years. The face amount is appx $800,000 and the csv $311,239 I agree life insurance has no business being in a qualified plan. You can earn more using other products. My dad always said that and he was a life agent. When I was in the law firm's Plan, I invested in the whole life insurance for a while. I was a single mother at the time and the life insurance option allowed me to leverage my Plan account balance. I invested say $1200 a year in a life insurance policy that had a death benefit of say $200,000. In the event of my death, that investment was more beneficial to my child than the $1200 staying in the Plan. I did cash it in once he went to college (12 years ago) and invested the proceeds in the other Plan options. YMMV you would have done better if u just purchased term outside the plan although 1200 a year isnt a big deal. in these cases being disucssed, we are talking about a lot more per year and keeping money within whole life within a qualified plan means at retirement you need to come up with a chunk of change to keep the insurance, find some creative way to keep and pay for it in a plan that can hold it. or be forced to surrender it. whole life is a mistake if you dont need or desire a permanent death benefit. you may have felt you wanted a permanent death benefit at the time you purchased it which is fine but if you didnt then it isnt the correct decision for most people. Additionally if you had been fired (which is probably a real concern now a days with economy more so than usual) you are forced into a situation where you now dont have a job and either need to buy it out or surrender it. For many that is a surrender for a loss. i should add that if this was done prior to 2005 then the IRS was less clear about fair market values of life insurance and you likely could have purchased the insurance out of the plan for a "good deal". Now a days that is less likely to fly. You may be right about ding better with term outside of the Plan, but that would have been $1200 (or whatever the premium was 20 years ago) out of my pocket and this contribution was made into my account by the firm. And $1200 can be a big deal to some people. My point was that in some instances, life insurance thru a QP can look attractive to particpants - whether or not whole life is the best option for them. Why would I have had to surrender it if my employment had been terminated ? I would have just left the money and the policy in the Plan. Or was there some rule about having to use current contributions for the premiums and there was a limit of 50% of those premiums ? As I said, its been a few years - I left there 6 years ago and haven't rolled over my account yet.