Chaz

I second Brian's recommendation. This is something that requires a detailed analysis that you are not likely to get on a publicly accessible forum (as useful as it generally is).

Our client filed the 2017 forms when it received the notice from the IRS regarding its 2016 forms so it was probably sometime late in 2018 or early 2019, I don't recall. I have no particular expertise in reading political tea leaves so I will refrain from responding to your other question.

(See my response on other thread.)

I have been working with a client to whom the IRS assessed a penalty for the client's failure to file 2017 Forms 1095-Cs. The client was granted relief for failing to do so in 2016 and it self-corrected for 2017 before it received any letter for that year. It's been a frustrating process as we have been deluged with virtually identical computer-generated forms that have been non-responsive to our formal appeal and so far we have been unable to speak to an actual IRS person. I think that ultimately there is a good chance that the IRS will eventually deny the appeal and the client will have to pay the penalty. Perhaps the IRS's policy is "one free pass" and, if this is your client's first failure to file, the IRS may grant relief for it.

Thanks!

For obscure reasons, an employer provides health insurance through a funded welfare plan arrangement (i.e., through an ERISA trust). The employer inadvertently used plan assets to pay non-health plan expenses and therefore engaged in a prohibited transaction. The employer repaid the amounts to the plan plus appropriate interest within the same plan year as the prohibited transaction. The employer disclosed the prohibited transaction on Schedule G to Form 5500. In addition to repaying the amounts, does the employer also owe an excise tax to the IRS for the prohibited transaction? If so, is the mechanism for paying the excise tax through Form 5330? Even if there is no excise tax to pay, should the employer file a Form 5330? The instructions to Form 5330 seem to indicate that the Form is inapplicable to this situation and Schedule G's instructions provide that Form 5330 should be completed if the filer is a pension plan. I do not have any experience and wonder if anyone else has come across this. Thanks!

If these ex-employees are given cash that they can use to purchase insurance (if they choose) or for other purposes (if they choose otherwise), then this is just taxable compensation and is not a group health plan. If these ex-employees must provide evidence of coverage before they receive the stipend (i..e, they are reimbursed for the cost of coverage), then it is most likely a group health plan subject to ERISA. Either way, it is unlikely that any state insurance law will be applicable. But, as leevena says, we would need more facts before making a determination. It is probably best that you ask your questions to benefits counsel.

I agree with Belgrath that there is no prohibition on default or evergreen cafeteria plan elections. I also agree that evergreen FSA elections are both very uncommon and a very bad idea.

You would need to look at the benchmark plan in the applicable state to make that determination.

If an employer improperly provides an incentive to a Medicare-entitled employee to waive employer-based coverage or otherwise violates the Medicare Secondary Payer rules with respect to that employee and Medicare learns of this, is there any potential adverse consequences to the employee for such violation?

I agree wholeheartedly with your analysis. I call it counterintuitive because if, in the above scenario, the President has to pay $1 for coverage (i.e., pre-tax), that would violate the nondiscrimination tests but if he or she has to pay $0, that wouldn't.

If the President is not paying any portion of the premiums, he or she is not participating in a cafeteria plan. Therefore, this arrangement, by itself, does not violate the cafeteria plan nondiscrimination tests. I recognize that this seems counterintuitive.

If a third party pays certain individuals' COBRA premiums, does that third party risk creating a MEWA or otherwise being deemed to be engaged in the business of insurance? A specific example would be a hospital or other provider paying the COBRA premiums of certain of its patients, in effect in order to get reimbursement from the patients' insurer.

Ohio is actually requiring insurers to permit its clients to defer paying premiums for up to 60 days. I find that amazing. (I'm not sure about Washington.)

If an employer receives medical information in its role as an employer (e.g., for sick or FMLA leave purposes), HIPAA doesn't apply because an employer is not a covered entity subject to HIPAA. If an employer, however, learns of the medical information in its role administering a health plan (e.g., from a claims report or if an employee calls up asking "Is COVID-19 treatments covered by the plan?") then that information IS subject to HIPAA and the employer cannot disclose the information for non-health plan-related purposes without a written authorization from the employee. Your scenario is most likely in the first category so, at least with respect to HIPAA, there are no restrictions on how the employer may use the information, although other employment laws may apply. Hope this helps.

I repeat my suggestion to get benefits counsel involved.

That is generally correct.

If your cafeteria plan so provides, you can permit the former employee to make HSA contributions from his or her severance payments on a pre-tax basis (assuming, of course, that the employee remains enrolled in a qualifying HDHP). The employee can also pay the employee's share of the cost of coverage (whether through COBRA or through extended coverage) on a pre-tax basis from his or her severance pay as well, again, if the cafeteria plan so provides. Of course, the amount of pay must be higher than the amount of the pre-tax payments in order for this to work. Many cafeteria plans don't have this provision because, among other things, it increases the employer's administrative responsibilities. Severance payments are generally considered W-2 wages, so you really can't treat them as anything else.

I am not sure I fully understand the circumstances but is the CBA the only document obligating the employer to make these specific contributions to the H&W fund? Did the employer sign a participation or other agreement with the fund whereby the employer agreed to make contributions for these benefits? If not, the only contract is between the employer and the now-decertified union, of which the H&W fund is presumably not a party. I cannot see how the fund can enforce it unless there is another agreement between the fund and the employer. You probably want to get benefits counsel involved.

Does anyone have any thoughts on this? I have come across virtually the same circumstances and had the same thoughts and questions that rocknrolls2 had 12 years ago. Any help is appreciated.

Sounds like a typical mini-med plan. It's not insurance.

I think you are correct. To the extent that Company A (or an entity within Company A's control group) continues to maintain a health plan, it must offer continuation coverage to the terminating employees. If Company A (and entities within its control group) cease offering a health plan to its/their employees, there will be no COBRA obligation.

This is something that you may want to get some formal (e.g., not from here) legal advice but I take the position that someone participates in a cafeteria plan only if he or she makes an election between taxable compensation and nontaxable benefits. Here, it appears as if the HCEs are not making such an election and therefore are not participating. They certainly are not benefiting because their compensation is not being reduced on a pre-tax basis to pay for benefits. Indeed, it isn't being reduced at all. Therefore, the plan does not run afoul of the Section 125 nondiscrimination tests. Counter-intuitively, if the Company paid 90% of the cost of the coverage for HCEs and 70% for NHCEs, it WOULD, in my view, violate the tests

Off the top of my head, I believe the language in the plan is referencing the HIPAA nondiscrimination rules, which I recall prohibit applying an actively at work requirement that has the effect of excluding from coverage an employee who is absent from work by reason of a health status-related factor. I don't have the applicable section of HIPAA handy, but that is where I would start.

You should speak with someone with family law expertise for definitive advice but, in most cases and states, custody does NOT equal guardianship. Guardianship is a legal process that in most cases takes a number of months to complete while designations of custody can usually be arranged much faster. This issue comes up often with respect to health plan eligibility as many plans include legal guardianship as an eligible class but are silent on legal custody.