Peter Gulia

Is this new question about whether a plan was "timely amended" much different than the Form 5500 schedules' queries that ask about a failure to have fidelity-bond insurance, a theft loss, or a nonexempt prohibited transaction?

Leaving aside questions about what summary of a plan is necessary, prudent, or wise, what does the plan's document say about what act the plan's sponsor must do to amend the plan?

To be clear, I'm asking about a situation in which the plan has no need to communicate with anyone beyond the participant who submitted a claim. A part of why I'm asking is that a client asked how the U.S government would detect that the plan lacks the identifier? The same employer asked what liability or penalty could result from failing to use or obtain the identifier?

Much has been written about a requirement that a non-insured group health plan obtain a health plan identifier [HPID]. But if the only thing the plan does is pay or deny a claim submitted by a participant, when (if ever) does such a plan use this new identifier?

jpod, that was my immediate and highest-order concern when first I heard about this situation. I advised my client that each employer must make truthful, accurate, and complete insurance applications from now on. I advised also about duties and obligations to inform the insurer about previous misstatements. Once the insurer has the true information, will the insurer retroactively cancel the coverage? Or will the insurer increase the premiums for past periods to what they ought to have been had each (separate) group contract been rated using the true information?

Does the mistaken request happen often enough that one should write a "form letter" to respond to it?

It's often helpful, at least in analyzing the administrator's rights and responsibilities, to separate the concepts of guardianship and conservatorship. That a person is presumed, or court-ordered, as a minor's guardian of the person does not necessarily make that person a conservator or guardian of the minor's property. It's at least possible that a minor's surviving parent is a guardian of the minor's person but lacks authority concerning all or some of the minor's property. On your questions about how much care a plan's administrator might use in satisfying itself that a proposed payee is a proper payee, what do the plan's documents say the administrator must do, and what do the plan's documents say the administrator may do? And if the plan is ERISA-governed, is what the plan's administrator is thinking about doing (or omitting doing) within the standard of care set by ERISA section 404(a)(1)?

If the actuary's services include making or keeping records that the plan's administrator relies on to perform its accounting for the plan's assets, income, or expenses, an independent qualified public accountant might request (and usually should request) a SSAE 16 report on the actuary's controls for those records. If the actuary's services are limited to actuarial reports based on information furnished by others, there might be no system of records or controls that an actuary's independent CPA could report on.

KJohnson, thank you for the further help. I had thought about ERISA section 3(5)'s different definition of employer. The businesses in my not-entirely-hypothetical do not have (and never had) 25% common ownership, and were not otherwise previously related. I considered too the possibility that an applicant's false statement might be grounds for an insurer to cancel coverage. But am I right in guessing that the arrangement is a MEWA at least until the coverage is cancelled or expired?

Austin Powers, in which publication should I look for your article?

Chaz, thank you for your response, and for helping me feel that I didn't miss something obvious. Which other facts could affect whether the arrangement is or isn't a MEWA? Because the Federal and State governments' fight against MEWAs has been about an arrangement that tries to avoid insurance regulation and that involves risks of the claims payer's insolvency, it seems odd to apply MEWA reporting to plans that are fully insured.

Two businesses that are not commonly controlled, affiliated, or otherwise related under Internal Revenue Code section 414(b)-©-(m)-(n)-(o) acted together and applied for group health insurance as though they were one employer. Have they created a multiple employer welfare arrangement?

Has ASPPA published anything about this?

Or invite the plan fiduciaries to evaluate some investment alternatives that pay a little less indirect compensation.

For a typical partnership (including a limited-liability company) or S corporation, pass-through tax treatment might mean that the employer's marginal tax rate is (or approaches) zero. For a C corporation, a marginal tax rate can be substantial, especially for the portion of the business that is done in Boston, New York, Philadelphia, or San Francisco. Does the proposal software also have an aspect for a pass-through business owner's marginal tax rate (which might vary following residences and business locations)?

Does anyone know about any court decision that found an actuary was a plan fiduciary, or at least that a complaint sufficiently alleged that an actuary was a plan fiduciary?

I haven't reached any conclusion. Rather, I've enjoyed the opportunity to learn from you.

But does paragraph (a)(1) make it unnecessary to use (d)(4)?

QDROphile is right about some practical effects of the taxpayer-confidentiality rules. Isn't it simpler and more accurate to have an outside lawyer ask the IRS person? The lawyer describes as much of the facts as it is feasible to describe without revealing the client's identity.

An executive agency's interpretation (mostly from 1979) of the statute is here: http://www.gpo.gov/fdsys/pkg/CFR-2013-title29-vol4/pdf/CFR-2013-title29-vol4-sec1625-10.pdf If the group health plan uses regulated health insurance contracts (rather than an employer's unfunded payments or a VEBA), isn't it good enough that the employer's actual payment is equal for every employee?

About not merging plans across different tax-Code sections, see IRS Letter Ruling 2003-17-022. Leaving aside (or integrating) questions about which plan ought to be the survivor, consider whether it's feasible to amend the to-be-terminated plan to provide that the only form of distribution is a single-sum payment, and that for a distributee who does not properly instruct his or her preference between money and a direct rollover, the default is a direct rollover to the survivor plan.

If you recommend a provision to your client and your client responds with an e-mail that says yes (and implement it as soon as possible), isn't that exchange of writings an amendment of the client's written plan?

As many in the BenefitsLink community often rhetorically ask, what does your client's written plan say?

Does the plan's administrator report its Form 5500 using cash accounting or accrual accounting?

Even if section 204(h) might not require its notice, wouldn't a prudent fiduciary communicate about the changes anyhow?