Chaz

It has to be pointed out that, although the employer undertakes the risk of terminations with overspent accounts, in the long run the employers usually come out ahead because forfeitures usually are more than overspent accounts. Note that employers usually use net forfeitures to pay the administrative expenses of the plan, not having big parties.

Probably yes, if the participant can show that the expense for the pilates class would not have been incurred but for the arthritis.

There's no specific exclusion for churches under ADEA but I believe there has been some case law stating that the 1st amendment may preempt application of ADEA in certain circumstances. I would speak with counsel. Some research is needed.

Brokers shouldn't practice law without a license.

You are going to have to look at your state's insurance law to see the extent to which insurers can use medical underwriting to determine your group rates.

An employer CAN limit the HSA provider to which it will deposit its HSA contributions and to which it direct deposits employee contributions. If an employer permits amounts to be transferred to another HSA provider, however, it will avoid the possibility of the arrangement being an ERISA plan.

Thanks for the response. That's what I was thinking too but there are SO many plans out there with multiple limits on individual benefits.

Bueller? Bueller?

One issue is that some employees are going to get pissed off if they are deemed to make an irrevocable election that they didn't want to make. If you go ahead with this scheme (and I advise not), from a legal point of view, you have to make sure that the initial election form clearly states that the elections carry over from year-to-year unless the employee affirmatively changes it. If not, the above mentioned p.o.'ed employees will have more grounds for a beef. There is also the issue of undoing invalid "elections" (due to, for example, a child aging out of the DCAP).

Does anyone have any insight on this?

PPACA limits the ability of plans to have annual limits on essential health benefits. Is that calculated on an aggregate basis (so, as long as plan doesn't exceed the annual limit for all essential health benefits, it is okay) or is it applied on a benefit-by benefit basis (so, for instance, a plan can't have a $xxx annual limit on occupational therapy, assuming OT is an essential health benefit)? I haven't seen this discussed anywhere.

I generally agree with Sniffles analysis except that federal COBRA is administered by the DOL and not by state insurance departments.

The employer may be considered to have one "plan" from periods prior to March 23, 2010 through now. If so, changing from a PPO to an HDHP may not necessarily blow GF status just because of the switch. More likely is that you will lose GF status because the deductible under the HDHP is higher than the deductible under the PPO. More facts are needed to make a definitive determination.

I share with what I suspect is your discomfort in permitting the amounts to revert back to the employer. In my experience, some folks at state insurance departments are not very familiar with MEWAs (even the ones that purport to regulate them) so I would take their view with a grain of salt. The last PLR that you refer sounds promising.

As 401 Chaos states, it really depends on the purpose that you are counting. There is a distinction, however, between restricted stock, which is generally deemed transferred on the date of grant (and thus is subject to Code Section 83) and an RSU, which is generally deemed transferred upon vesting.

I hate to punt on your question but have you looked at the DOL advisory opinions on the topic from a few years ago? I think the DOL has permitted transfer of a terminating MEWA's plan assets to a VEBA or a tax exempt entity but I don't believe that it has permitted reversion to the employers.

In any event, it's not going to keep grandfathered status if the deductible increases.

What, then, do you make of the reference to the requirement in the above mentioned regulation that states that "any maximum limit attributable to employer contributions" must be uniform for all participants?

Just a quick clarification: If the amounts are not taxable, the arrangement will likely fail the nondiscrimination tests, not the other way around. The consequences for failing the nondiscrimination tests are not necessarily that the amounts paid become taxable. I can't opine on the 409A part of the question.

Non-409A comment: The arrangement you describe likely violates the Code Section 105(h) nondiscrimination rules if the amounts paid are not taxable to the employee.

I'm not sure where in 105 there is the language that employee contributions are considered employer contributions. I skimmed the regs VERY quickly. Treas. Reg. 1.105-11©(3) is the location of the prohibition on having discriminatory benefits and there is no such mention.

I'm not sure if this is the correct forum but none of the others seems to be appropriate for this question, which may be an easy one: Is a Medicare participant's Health Insurance Claim Number (HICN) the same as his or her social security number (SSN)? Thanks.

The short answer is that the plan likely passes the cafeteria plan nondiscrimination tests under Code Section 125 because the HCEs aren't participating in a cafeteria plan. The plan will, however, likely fail the benefits test of the self-insured medical plan tests under Code Section 105 because the benefits provided (i.e., the employer contributions) thereunder are discriminatory. The consequences for failing the Code Section 105(h) tests are NOT that contributions become taxable. Rather, the "excess reimbursements" made to HCEs will be taxable. That calculation can be complicated.

An employer violates the MSP rules by "taking into account" active employees' Medicare status (and not offering those entitled to Medicare coverage under the active plan). I understand the penalties and taxes for this violation. What now, though? Does the employer have an affirmative obligation to report the violation to CMS and/or the IRS? If so, what is the mechanism for doing so?

I think that you mean Medicare when you say "If they are 65 or older they have medicaid." The Medicare Secondary Payor rules prohibit you from taking into account Medicare entitlement for purposes of group health plan eligibility. You should speak to your counsel on the best way to provide health coverage without violating the law.