Chaz

The HSA world is kind of the wild wild west out there. There are so many issues, this being one of them, that I don't think were contemplated when HSAs were created. I find a lot of administrators, plans, and providers are flying by the seat of their pants. An overriding issue is, if the administrator is NOT a BA, can the plan provide PHI to the administrator under HIPAA without the participants' authorization (because the plan is not disclosing the information for TPO purposes). If the administrator is not a BA, then a BA agreement won't help, don't you think?

It's not really the provider's problem because in any event it is not a covered entity. It is the plan that is balking. I saw that K&S alert but I was wondering if there has been anything since then. Thanks.

Does anyone have any thoughts on this?

As a disinterested observer, I must say that I find this discussion both entertaining in tone and informative in content.

Can a service provider who provides HSA debit cards and other HSA administrative services be a business associate of a group health plan under HIPAA? Practically, the answer should be yes, but is the service provider providing payment or health care operations on behalf of the plan? I'm not so sure. [CROSS POSTED TO HIPAA BOARD]

Can a service provider who provides HSA debit cards and other HSA administrative services be a business associate of a group health plan under HIPAA? Practically, the answer should be yes, but is the service provider providing payment or health care operations on behalf of the plan? I'm not so sure. [CROSS POSTED TO HSA BOARD]

Many clients are waiting to see if guidance comes down on a whole load of open issues.

That's a possibility, but can't that also be said for other benefits (e.g., DCAP) that are permitted to be offered under a cafeteria plan?

I know that Code Section 125 specifically excludes benefits provided under Code Section 132 (e.g., qualified transportation plans). Does anyone have any insight or thoughts on WHY Congress decided to not permit transportation benefits to be offered as part of a cafeteria plan?

N.B. Notwithstanding the nontaxability of the physicals, if the employer is a public company, to the extent that the executives are "named executive officers," the amounts must be disclosed in the company's proxy statement in the Summary Compensation Table.

Susan, Your HR department is generally correct; elections to participate in a cafeteria plan on a pre-tax basis are generally irrevocable (i.e., can't be changed) unless certain events occur, such a life status change. What the HR Department may be missing is that under IRS regulations, election changes may be permitted mid-plan year upon a significant increase in the cost of coverage. Your employer does NOT have to permit changes upon such an occurrence. You should ask for the plans' summary plan description to see if it is an event permitting an election change. Also, your post kind of implies that you chose this new plan during open enrollment before April 1. Were you given materials at that time telling you what the premium was? If you elected that coverage during open enrollment you will not be able to change the election unless a qualifying event occurs during the plan year (i.e. after April 1).

Company has a number of ex-employees on COBRA. Company wants to terminate all its group health plans. Contemporaneously with the termination of the Plans, the remaining employees will become "employed" by a leasing organization or PEO for payroll and health plan purposes. The remaining employees' jobs will essentially be the same. Can the Company terminate the COBRA coverage for the ex-employees because the company no longer maintains a health plan for the benefit of any employees?

Bueller? Bueller?

Employee and husband divorce. Husband drops children (residing with employee) from coverage under his plan during open enrollment (end of '07). Employee doesn't find out children had no coverage until now (i.e., May '08). Assuming cafeteria plan permits all election changes that are in accordance with the Code, can employee cover her dependent children mid-year under her plan under the "Change in Coverage under Other Plan" exception to the irrevocability rule? If so, can it be done retroactively? (I doubt it.) Second, assuming the answer to the first question is "no" and the employee obtains a QMCSO directing the plan to add the dependents mid-year, can the QMCSO properly require the dependents to be added retroactively? Any help is appreciated.

I agree that training expenses can be reimbursable, but you should be careful in reimbursing expenses that are not incurred "but for" the medical condition. For example, gym memberships that were opened before visiting the doctor should not be reimbursed. Also, once the condition has resolved, no more reimbursements should be made. I think a conservative approach would be to require the Rx to set forth a fixed number of sessions.

Does anyone have any insight on this?

Thanks for the explanation. I was just taking issue with your statement "409A plans are 'top-hat' plans."

I disagree. While it would be unusual for a plan with Section 409A concerns to be an ERISA plan, it is possible. 409A is just a law addressing the taxation of nonqualified deferred compensation; a service provider who is not among a select group of management or highly compensated employees may easily be subject to 409A's penalties.

Did you mean "service recipient" where you wrote "service provider" above? If the service provider has the ability to accelerate vesting, that wouldn't constitute a SRF and you would not be able to use the ST Deferral exception.

Employer maintains a self-insured health plan. An employee enrolls herself in health plan through the employer's cafeteria plan but does not enroll her dependents. Employee (still working) becomes eligible for Medicaid (don't ask). Under the employee's state's HIPP program, the state will pick up the tab for the employee's and her dependent's coverage under the plan. The state has sent a letter requesting that the plan put the individuals on the plan effective July 1. Since the plan runs on a calendar year, this would be in effect a mid-year election change. Leaving ERISA preemption issues aside (which I think exist, but the employer doesn't mind complying), is the change problematic under Section 125? The two most relevant events permitting an election change don't seem to apply: It's not a QMCSO because it's not related to a divorce, separation, etc. and it doesn't fit in the Medicare/Medicaid exception because that exception only permits you to DROP coverage upon being eligible for Medicaid (and vice versa). Here, the employee is staying on the plan and the dependents are being added. Any thoughts on this are appreciated.

I suspect you are right. But I am having a hard time convincing my corporate-oriented colleagues that such non-compliant agreements will not be fixable (i) in the event that the 409A penalty will arise, if at all, many years later; and (ii) all the parties involved at all times intended to have these agreements comply. This may arise not only with agreements that were in effect during the transition period but those drafted post January 1, 2009. Mistakes happen in drafting and it seems incongruous for an individual to have to pay a penalty for a document that is inadvertently non-compliant which is correctable while there is still a substantial risk of forfeiture. Perhaps the IRS/Treasury Department will expand their corrections program to apply in these circumstances. Or is that too much to hope for?

Hypothetical: It is after January 1, 2009. Employment agreement with specified employee of public company provides for $1 million payment if the executive terminates employment for any reason at any time following a change in control. The agreement does not provide for a six month hold-out (oops). Executive/Company realize this before a change in control occurs or is even contemplated (i.e., when there is a SRF) and want the agreement to be 409A compliant. Is there anything that can be done to fix this?

Does anyone have any thoughts on this?

Agreement provides that in the event of employee's termination of employment, company (private) has the right to purchase company stock acquired by employee. If the right to repurchase violates a loan covenant or other agreement, the company has the right to make the payment in the form of a five year demand note in favor of the employee, accelerating upon a liquidity event occurring. Is this problematic under Section 409A (as possibly disguised deferred comp) or am I crazy and this is totally outside the scope of deferred compensation? Thanks.

Has CMS ever promulgated any fines or penalties to be assessed against plan sponsors who fail to provide the Medicare Part D Notices of Creditable or Noncreditable Coverage to active employees (who are otherwise entitled to a notice)? I can't seem to find anything on the wonderful thing that is the CMS website. Thanks.