Chaz

Let me note that, in the case of #1, the arrangement probably HAS inadvertently created a MEWA. There is no other structure that it can be. I'm not sure whether you were questioning that. Getting out of that mess is another story.

#1 appears to be a mess that a quick message-board answer probably won't do any justice. I can see the logic that COBRA is not required but I would tread carefully. With respect to #2, I have always taken the position that COBRA is only required in the event that dependents continue to be covered generally under the plan. Otherwise, there are no "similarly situated" employees (i.e., parents) to compare the coverage.

They are not entitled to COBRA because they have not incurred a qualifying event.

Prior to sale transaction, seller has QBs on COBRA. Upon closing, Seller ceases to provide health insurance and the Buyer takes the QBs onto its plan. What type of election period does the Buyer have to provide these QBs? Must they provide them with a new 60 day election period or some other (shorter) period to elect?

I recall that HHS has (informally?) stated that broad-based cash-out plans do not violate the MSP rules.

Thanks for the feedback. We have the EBIA books and they are very helpful in advising our client but we are not in the position to perform the actual tests on a cost-effective basis. I guess the answer is self-evident to the question of why there are firms willing and able to do testing with respect to qualified retirement plans but are not able to do so with welfare plans, but it is frustrating.

I don't think the plan specifies that the admin expenses must be for that particular plan year.

Does anyone have any thoughts on what the effect of PPACA's external review procedures have on the ERISA concept of claims fiduciary? I'm not sure anything changes but if a participant can have a review from an independent third party that overrides the decision of the plan administrator or third party administrator, can a case be made that the respective administrator is not a fiduciary with respect to claims determinations?

I think the answer to your question depends on the activities that the COBRA administrator is doing. If it is making discretionary determinations (e.g., making gross misconduct determinations) it will be more likely to be a fiduciary but if it is making merely ministerial eligibility determinations based on the terms of the plan and COBRA (which will be the case the vast majority of the time), it is unlikely to be a fiduciary.

You can do it but you probably would want to gross up the amount.

Bump.

Can anyone recommend an actuary or other professional that is very experienced and comfortable with the morass that is the regime of welfare plan nondiscrimination tests (self-insured medical plan, cafeteria plan, DCAP, etc.) for a possible engagement to perform these tests for a foreign headquartered employer with numerous U.S. entities within a common control group? Or is this a facetious question? Thanks.

For what it's worth, I tend to agree with Leevena on this one, although it does require some thought. The $5 laundry expense probably isn't reimbursable either (but if laundry was included as part of the weekly day care fee then it might be). Whether the zoo trip would be reimbursable is probably a facts and circumstances test. To me, the computer camp example is just explaining that the expense need not be the least expensive option available in order to be reimbursable as long as it is for care. I would argue in any event that the camera doesn't to provide for the child's "well-being & protection", it is for the parents' piece of mind. The presence of the day care provider, which is what protects the child.

I would like to revisit this issue. Assume a health FSA has a lot of forfeitures for a year, so much so that the forfeitures exceed the total of all conceivable plan administration expenses for that plan year by a substantial amount. Also assume that the plan document provides only that forfeitures are used first to defray administrative expenses and second to be returned to participants. Can the employer hold on to the forfeitures (in accordance with ERISA's plan assets rules) to pay for future plan years' administrative expenses?

I'm really asking whether the Purchaser can limit COBRA participants to one of the options.

Not to beat a dead horse, but what if the Purchaser's "current plan" has several different medical benefit options. For example, presume it offers its active employees a choice of a high deductible plan, a low deductible plan, and an HMO. Which option must it make available to the COBRA participants coming over from the Seller?

All of them - if they are all available to active employees. COBRA beneficiaries have to be offered the same options (and enrollment/change rights) as active employees. I'm not talking about open enrollment, which I know the rule is that COBRA participants must be permitted to enroll in any benefit open to other similarly situated employees. That aside, ordinarily, COBRA coverage must be "identical" to what the QB has prior to the QE. In a transaction where the seller's plan goes away, there is no "identical" coverage under any of the purchaser's plans. What am I missing?

Which one (or ones?) of the existing medical options must the purchaser make available to the COBRA population?

Seller is selling its assets to Purchaser. Seller maintains a insured medical plan with a high deductible and copayments, which plan will terminate upon the closing of the transaction. Purchaser will be a "successor employer" under COBRA. Purchaser maintains a self-insured medical plan for similarly situated employees with three different plan design options. None of the options are similar to Seller's plan, although one of them has a higher deductible than the others. Can Purchaser require QBs who continue coverage to enroll in the plan with a higher deductible? Alternatively, can Purchaser set up a new self-insured plan option that has the same deductible and copayments, etc. as the Seller's plan for just the QBs?

I think your analysis is correct. The above presumes that the employer permits employees to contribute to HSAs on a pre-tax salary reduction basis.

Under ERISA Section 104, a plan is generally required to provide a copy of the plan's SPD upon a participant's request. If the plan provides a copy to the participant must the plan (at a later time) also provide a copy to the participant's authorized representative if the representative makes a request? (Assume that the participant is still living and that there is no presumable reason why the representative can't get the document from the participant.)

This is something that you want to speak with your benefits counsel about. I don't know enough of the facts to provide an informed opinion.

If companies can get rid of their COBRA obligation merely by changing "their name as well as their tax id number" there wouldn't be much left to the COBRA statute!

The same way that it would work in any sale of assets transaction: The successor employer (i.e., a hospital) would provide coverage under its plan. How is medical, dental, etc. coverage being handled?

This is off the top of my head without doing any research but I think a better approach might be to consider the dissolution instead as a sale of assets (what is happening to the assets of the JV anyway?) and carry over the continuing employees' elections and balances to the hospitals where they are going. The IRS might not look favorably on permitting these employees to make new elections mid-year. Terminating employees would then have to be offered to continue their health FSA in accordance with COBRA. Again, these are just my thoughts without looking at it in-depth. You should definitely ask benefits counsel to look into this.