Chaz

Employee's COBRA coverage was terminated on April 1 retroactively to February 1 due to nonpayment of premiums. Is the employee precluded from obtaining Marketplace coverage now because his coverage was terminated outside the 60-day window Special Enrollment Period? I believe this is the case but am wondering if anyone has run across this situation.

Depending on the circumstances and the terms of your cafeteria plan, you may be able to adjudicate the claim manually and, if the claim if for a qualifying expense and was timely submitted, reimburse this employee under the FSA without using the TPA. You and your HR department should speak with counsel as resolving these issues are highly dependent on the facts.

Are you sure that the TPA is an ERISA fiduciary (at least for activities other than claims adjudication)? In my experience in the health plan area, that would rarely be the case. By contrast, the Information Letter you cite is with respect to a trustee of a multiemployer plan who clearly is a fiduciary. Virtually of the ASA agreements I review permit the TPA to delegate certain functions to its affiliates and there is no disclosure of how much of the fees go to the affiliates. That is even the case where the plan sponsor is a multiemployer health and welfare fund.

Thanks Peter. I am coming at this from the Fund's side of the table, not the employer's. The trust documents are silent.

Does a multiemployer health & welfare fund have to provide a requesting contributing employer with an actuarial report or financial statements? I believe this requirement exists for multiemployer pension funds but I am not sure if the same rules apply to H&W funds. Thanks!

I was referring to the document production requirements under ERISA Section 502. Courts are all over the place with respect to which documents a plan has to produce pursuant to a participant's request.

This is definitely something you should speak with counsel about and not go alone. There is case law all over the board regarding disclosure requirements and you need someone to carefully review the actual participant request.

The MSP rules make it generally impossible for a 20+ employee employer to reimburse Medicare premiums, with or without a QSEHRA. It may work for employers with fewer than 20 employees.

Anyone have any thoughts?

There are a couple of groups of forums that I have generally have no need to see ("Retirement Plans" believe it or not and "User Groups"). Before the upgrade, I could hide those groups. After the upgrade, when I first go to the site, both those groups are unhidden and I manually have to hide them. It's not the biggest thing in the world, but is there a way to make them so I do not have to manually do hide them?

Again, unless there is an applicable state law, the question is not "can" but "does." The only way you can tell for sure is to review the plan document/summary plan description. I will say that a plan design permitting an adult, nondependent child of an employee to be eligible for coverage would be HIGHLY unusual. There may be a way to require the ex-spouse employee to cover the child through a QMCSO process but that is outside the area of my expertise and you would have to consult with an attorney who practices family law.

That sounds like a group health plan subject to an annual limit and one that is not integrated with the employer's major medical plan.

You have to consider the comparable contributions requirements (if not using a cafeteria plan for HSA contributions) or the cafeteria plan nondiscrimination tests (if using a cafeteria plan). Also, you must consider the self-insured plan nondiscrimination test if your PPO is self-insured.

An employer has a large amount of heath FSA forfeitures on its books. Can it use these forfeitures to pay for TPA expenses for the health FSA that were incurred in years prior to the year in which the forfeiture relates. For instance, can it use 2016 forfeitures to pay (in effect, reimbursing itself) for administrative expenses incurred in, for example 2010?

(1) If the plan is self-insured, the state will not matter as ERISA generally preempts state insurance law with respect to such plans. If it is a fully insured plan, the state may have a law requiring extended coverage so it does matter in that case. I should have mentioned that in my initial answer. (2) There are varying definitions of "disabled" but it generally will include something along the lines of the child being unable to work by reason of a physical or mental handicap and being chiefly dependent on the employee for support, etc.

As an aside, this plan design might violate the cafeteria plan nondiscrimination tests. Hopefully, this is something that you have considered.

This is a plan design issue. Many, but not all, employers permit disabled children (and other relatives) who meet the definition of tax dependent under the Code to continue coverage past age 26. It's not a question of "can"; it's a question of "does." The only way to determine that is to review the eligibility sections of the plan document and/or summary plan description for the parent's plan.

Under the Affordable Care Act, a cafeteria plan cannot be used to pay premiums for individual policies providing major medical coverage. It is possible to permit payment of premiums for individual dental policies but it raises COBRA and ERISA issues for which you should speak to counsel or at least your insurance broker before doing so.

I responded on the cafeteria plan board but see this here and it looks like you have already at least considered some of my thoughts. Off the top of my head, though, I believe that the IRS specifically prohibits allocating forfeitures based on experience, which you would be doing with respect to the guy in your example if you give him a non-uniform distribution.

My initial thought is that, depending on the language in the communication to participants explaining the arrangement (and also the plan document/SPD), an affected participant may have a contractual claim against Plan 1. Hopefully, the communication and plan documentation contains appropriate language regarding the ability of the trustees to change the subsidy for coverage under Plan 2.

This is an interesting question. I would guess without researching that an employer can have more flexibility in terminating a DCAP than it would an ERISA benefit even though there are employee contributions involved but I have no authority for that. In any event, I would hesitate in having the employer keep the contributions. Other than that, in the absence of guidance, I would try to come up with an equitable solution such as having an extended run-out period, using the amounts to pay for plan administration, or providing for a reversion to participants in line with the IRS's guidance on forfeitures. Perhaps more than one of the above will do the trick. I would look at state fiduciary law as well as check to see if there are any applicable employment laws that might limit the employer's ability to do any of those things. Of course, the plan document should also be reviewed to see what it provides regarding termination.

Employer A was misinformed. There is no requirement under the ACA regarding eligibility for FSAs. In fact, not permitting these part-timers to participate may implicate the Section 125 nondiscrimination tests depending on the demographics of the employee population.

This does not appear to be retiree coverage. It looks like the owners want to be active employees and have the company reimburse their Medicare premiums. In general, for employers with 20 or more employees, Medicare pays secondary to active employer coverage. The Medicare Secondary Payer Rules prohibit employers offering an incentive for active employees to enroll in Medicare rather than employer coverage (this is a slightly simplified statement). An HRA will likely be such an impermissible incentive.

It's probably not going to work if the employer is subject to the MSP rules.

I see your point but how would a plan know if a participant ended up foregoing medical treatment because of the limit? How would a plan measure putting such participant back in the same financial position as before? Doesn't that relief apply only to failures that were corrected within 30 days? I'm not saying your position is not plausible but the result of this would be to permit plans to inform participants that there is a limit and roll the dice and address it only if a participant submits a claim in excess of it (it would more likely be an issue with an annual limit). I can't imagine the IRS permitting such a scenario.