Jacmo

So amend the 125 plan to allow premium reimbursement, although that may open a huge can of worms regarding other laws. EBIA recommends against it.

It will depend at least partially on the definition of dependent in the Plan Document. Usually, the larger the employer and whether or not self insured (self insured usually have greater latitude in plan design with the carrier/TPA), you will see an increase in leniency in what is allowed as a "dependent", which also includes same sex partners, etc.

As jsimmons indicated, your best shot (if acting alone) is to get a comprehensive ERISA manual. We use EBIAs ERISA manual. It has a sample Plan Document in the back. And you'll find plenty of information on what is needed in a Plan Document vs. an SPD.

I should think so. The employer is simply correcting a billing error. As long as the COBRA beneficiary in question is treated as any other employee or COBRA beneficiary, there should be no problem with correcting an error.

If I recall correctly, there are several different definitions available for "dependent", which may or may not include domestic partners. The employer usually has the choice, in the plan design (via the plan document), to determine the definition of dependent.

OJS--I don't see a problem with what you want to do, as long as you amend your 125 plan to spell out a match for that location.

What is it that you want the TPA to do?

It depends on the insurance carrier quoting. We see anywhere from 15-40% reductions in first year HDHP quotes, although the 40% ones are rare. However--we have also noticed that those employers who got the greatest reduction first year, will also, for the most part, get the highest 2nd year renewals. So there's a little bit of a game going on here. Is the carrier that's quoting the 40% reduction also after your HSA deposits (via their own bank)? They're willing to give up a little more premium in the insurance quote if they think they can get it back with your HSA deposits. The same type of thing is happening with HDHP/HSAs that I saw happen during the early '80s when PPOs first came into our area. There were fantastical 40% rate reductions to move to the PPO platform (off of traditional non-PPO platform). Everybody jumped for it. Of course, employees were traumatized with all of the new rules, and utilization dropped off dramatically. For about 18-24 months. Then the flood gates opened back up. And of course PPOs are not seen as anything special these days as far as cost control. It's basically back to business as usual in regards to claims. Now we have the new kid on the block, and the same game is starting all over again.

Good point! And if we assume that the HDHP is an insurance contract, then there should be no 105(h) problems.

To expand a little: The question is always "can I contribute to an HSA?" Yes, if you have a qualified high deductible health plan andyou do not have other first dollar coverage. Employee A can make contributions to an HSA with the new employer untilshe decides to elect Cobra under the previous employer's plan, at which point, he/she can no longer contribute to the HSA.

There are three separate categories of noncollectively bargained comparable participating employees for comparability testing: a) current full time employees; b) current part-time employees; c) former employees. These are the exclusive categories for comparability testing. No other categories are permitted. [ Treas. Reg. 54.4980G-3, Q/A-5©]. Thus it would seem that creating a category of HCE vs non HCE will not be allowed for purposes of HSA contributions. Which makes the rest of the question a moot point.

My people agree with Stuart's last post.

The concern over the undisclosed stop loss placement fee might be the lesser of their concerns. Since there are employee deductions involved, then those are plan assets. And apparently they are being transferred to the TPA. Which (I assume) is not an insurance carrier, bank, or IRS approved custodian. Thus, it seems to me this is a direct violation of ERISA asset trust requirements. Which requirements were put in place for the exact concerns expressed by both you and the employer. Just a thought.

It's my understanding that 40% of all insurance contracts in this country renew on 1/1. Carriers (and brokers, and TPAs) are slammed, so service slows to a crawl. It's tough to get anything done quickly. You have to add about 2 months to the lead time for a 1/1 renewal. From October to February, I personally work 10-12 hour days plus weekends. Not fun. (The long hours in January and February are "cleanup hours" for what happened on 1/1). Please note--it's not my intention to correct anyone. Simply to respectfully disagree, with a differing opinion.

Would the visitor agree that employees in city x and city y are not similarly situated?

Dmar--it's not age 59 1/2 for an HSA; it's age 65.

I respectfully disagree with putting the insurance on a calendar year, if you can avoid it. Carrier service goes "down the tubes" if you have a 1/1 renewal. As noted above, you simply amend the MERP on 9/1 of each year, if necessary--or, as Marie originally suggested--once, by changing the wording of the Plan document to read in effect that the employer will pay the balance of the deductible. The MERP stays on a 1/1 anniversary to stay in sync with the deductible accounting period of the insurance carrier. Your real challenge will come when the employer changes to an insurance carrier that has a deductible accounting period that differs from the current calendar year deductible. (Will the new carrier give "deductible met" credit, etc).

I might add that if you do it right, you will work very long hours and not make a lot of money.

LDRG is right. The policy has to be in the employee's name. I recall from the mid to late '80s that one of the reasons this rule was made was because thousands of employers were saving FICA dollars off the spouses of government employees--before they had a cafeteria plan.

The HSA "premium" (election) is just like a health insurance premium, from the standpoint of a 125 plan. So all you have to do is amend the POP plan to include HSA as an eligible benefit. In addition, the SPD should have statements in it regarding the fact that HSA elections are not subject to the Change of Status rules, etc. So the plan document and SPD need to be updated to reflect the special provisions of HSAs as an eligible benefit.

Thanks, Don. No, I didn't know that. And I agree that you'd have to have the additional facts and circumstances. Leevena: In your last post, you are now implying that there are 2 health options to choose from: One HSA compatible, the other non-HSA compatible. In that case, the employer does not have to make comparable contributions to participants in the non-HSA compatible health plan. For all employees who are in HSA compatible HDHPs, the employer must make comparable contributions. Exception to the comparability rule--an employer can make GREATER contributions to non-HCEs than to HCEs.

No final filing is required in the situation you have described--either for the 125 plan or the ERISA plans in it.

Don: "Could the employer establish an ERISA plan by not paying the premium on an individual policy?" Yes, it's possible. The most common scenario of this happening is when an employer takes an active part in communicating individual plan benefits, assisting with claims filings, etc. rather than simply providing the convenience of payroll deduction. leevena: eligibility alone won't meet the comparability requirements. There must be comparable contributions.

I agree with the CO Dept. of Insurance that the employer is sponsoring an ERISA plan, by paying for it. I don't know about the second part--"and thus, subjects that individual policy to the small group regulations". I assume that second part means "subjects that policy to the state's small group regulations."

The answer would depend on the results of the a/d tests.