Chaz

Does anyone have any thoughts on this?

Employer receives a discount on service fees for administering the employer's health plan if the employer designates an affiliate of the service provider as broker of record to market voluntary benefits to the employer's employees. Does that arrangement alone raise any issues that the benefits will become subject to ERISA because the employer has too much involvement with the arrangement or because the employer is receiving consideration in connection with the voluntary plan? Thanks.

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Thanks. Do you know or can you point me to a resource that can tell me what the "penalties" are that are separate and apart from the underpaid taxes and interest?

Can anyone recommend a message board similar to benefitslink but focusing on securities law? A Google search was not particularly helpful. . . .

I don't know the answer to this but does AZ (or MN if you worked there) have a state mini-COBRA law?

Thanks for the response Sieve. My question has to do with the consequences of the IRS finding out about the failure AFTER 2009 (say in 2010 or 2011). What will the IRS make the HCEs/plan do then?

Any thoughts on this?

Hypo: For 2009, a self-insured medical plan fails (i.e., will fail) the 70% eligibility test and the 70%/80% eligibility tests under the Code Section 105(h) nondiscrimination tests. The plan fails the nondiscriminatory classification eligibility test if only participants in the plan are counted (the conservative approach) and passes the test if all eligible employees are counted (the favorable approach). I understand that there is some uncertainty as to which employees should be included in the test and guidance from the IRS would be helpful but are there any thoughts as to what should the plan do now? If the plan chooses to rely on the more favorable approach and does nothing, what will be the consequence in the unlikely event that the IRS discovers this in a plan audit and takes the position that the more conservative approach is the correct one? If the plan is "fixed" in 2009, the HCIs will pay taxes on their pro-rata portion of the excess reimbursements. Presumably, that will also be the effect if the issue arises in an audit. Are there additional penalties for failing to correct a discriminatory plan? The plan passes the subjective benefits test. Any thoughts would be extremely helpful.

That might work with an active employee but not one on COBRA.

The order only removes the obligation from the employer to cover the child under the employee's plan. Under the terms of the second employer's plan, the child is still eligible for coverage so I am not sure if there is any exception under the cafeteria plan rules for the child to be removed except (possibly) under the QMCSO exception.

The IRS regs for DCAP change in elections due to new coverage becoming available are pretty broad. I think that kindergarten is likely to be considered a newly available provider permitting an DCAP election change.

Does anyone have any thoughts.

If the change in control definition consitutes a SRF and the payment is made within the short-term deferral period, the definition need not meet the 409A CIC definition because it would be a short-term deferral.

Employee gets divorced while working for a company. At that time an order is entered stating that employee must pay child support and enroll dependent child in employee's health plan, which presumably the employee does at the company. Employee leaves employment and goes to work for another employer and enrolls (through cafeteria plan) employee's child in plan as a part of initial enrollment. Sometime later, employee gets revised order stating that dependent original order is vacated (because the child is emancipated), therefore, employee does not have to pay support or carry dependent on health plan. Dependent is has been added to former spouse's plan although the revised order does not require it (it is silent on issue). Not sure how child was added but assume that the child was added in an open enrollment period held in late 2008 for the 2009 plan year. Can employee change employee's cafeteria plan election to remove dependent's coverage mid-year? Thanks for any thoughts.

Why do you think that a monthly cash payment can't be contingent on the employee paying for COBRA for that month?

I'd be interested to learn whether there is any update to this saga.

I am faced with this same situation. Employer is going out of business and is terminating all health plans including the FSA. My question is what happens to the employee contributions that haven't been used to reimburse expenses. They are plan assets and presumably they cannot revert back to the employer, correct? Anyone have any thoughts?

In order to eligible for the COBRA subsidy, the statute specifically requires that the involuntary termination of employment occur from September 1, 2008, through December 31, 2009. Unfortunately, it does not matter when the coverage itself was lost. Based on your description of the facts it does not appear as if your husband qualifies for the subsidy.

Can an plan administrators' QMCSO procedures provide that a QMCSO will not be honored if the QMCSO is not submitted to the plan administrator within 31 days of the date of the order?

Employer is instituting a severance program. Terminating employees will receive six months of coverage at the active employee rate. After that time, the employees may elect COBRA for the full statutory period. (For various reasons, the employer does NOT want to have the COBRA period run concurrent with the six-month subsidized continuation period. Can the employees pay for the six months of coverage on a pre-tax basis from their severance pay? Section 1.125-1(a)(3)© state that "Premiums for COBRA Continuation" are qualified benefits under Code Section 125. Does that logic apply to "Premiums for NON-COBRA Continuation"? (The COBRA subsidy is not a concern or at issue.)

The model notices are to describe the new CHIP program itself and the notices will not need be delivered for quite awhile. There is a separate requirement that plans must permit employees who lose coverage under CHIP or Medicaid or who become eligible for a state CHIP or Medicaid subsidy with a 60-day special enrollment right into the plan. That requirement was effective April 1. There is no statutory requirement to notify employees of this requirement but plans must permit the special enrollment now. Although there is no current notice requirement (and SPDs do not have to be amended now), we are advising clients to send a brief notice to employees informing them of the new special enrollment right. Note that SPDs probably will have to be changed in more than a few places because often they refer to the "30-day" special enrollment period.

Has anyone faced this situation?

As a follow on to this, at least TWO large COBRA administrators are not providing the 35% amount in the extended election COBRA notices. One of them (at least) is not including the 35% amount in the general notices going forward (and are just sending the old version of the COBRA notice along with a subsidy "insert"). Is anyone else experiencing this with their or their clients' COBRA notices? If so, what, if anything, are you doing about it? Thanks.

The IRS guidance confirmed your all interpretation. Thanks!