GMK

Thank you. The criterion I would like to know is if the 60% AV requirement is the value for the plan regardless of where participants live, or if it will take into account where the person lives. For example, as described in the OP, the plan can meet all the requirements if you receive your services in the provider's network, but it offers only emergency care coverage outside the network. We will wait to see if any guidance comes out on this. Thanks, again.

If my son or daughter were facing this situation, I would like to know what criteria the exchange personnel use when they do the work to decide such cases, if for no other reason than to ensure that my child was not accidentally or mistakenly deprived of a benefit. But that's just me, I guess.

Thanks to all 3 of you. We do point to the plan documents in our notice and have had a lawyer OK what we say. We will include something about consulting with the exchange about how the credit and subsidy rules apply to an individual's situation when they are out of the plan's service area. That's a good point, too. I appreciate getting comments from people who know what they're talking about. I must admit to being surprised that no one has a definitive answer to this. This is not a minor side issue. It affects a major group that ACA is trying to get insured. Lots of young adults under the age of 26 are out there trying to make a life on their own, and in many cases distant from their parents' health care provider system. Perhaps the answer falls out of the Minimum Value requirement. Maybe people living far away can claim that the plan does not cover 60% of the costs they will incur where they live. Maybe ... perhaps ... Those who are writing the rules need to provide clarification.

Thanks again, leevena. A primary concern we have is what we put in our notice to employees about the Health Insurance Marketplace. Along with the information in the model notice, we like to provide specifics that apply to our employees. Since our health plan coverage is 'qualified,' persons eligible for our coverage are not eligible for the credit or subsidy. I plan to say that in our notice, because it will be important to the children of a lot of people here, but I was hoping there was something I missed in the ACA pronouncements that gave those far away adult children a break. I suppose I could add that far away adult children of our employees should inform their state exchange that the coverage for which they are eligible doesn't provide local coverage and beg for mercy. I don't see this as an option for the federally-facilitated exchanges, but again, maybe I missed it.

Thanks, leevena. Yes, I should have added that the plan offered by Company A meets all the tests for benefits, availability, affordability, etc. Employees of Company A are not eligible for the tax credit or subsidy, because the plan offers 'qualified' coverage. So, now this far away adult child is eligible for coverage under the Company A plan by virtue of being a child of an eligible employee and under the age of 26. My reading of the rules is that this means that the son is not eligible for the premium tax credit or the subsidy for co-pays and deductibles. Agreed? Tough break for the son, it seems.

Wondering how ACA handles the following hypothetical case: Employee of Company A has a 23 year old son. The son has a job with Company B, 800 miles away in another state. Company B does not offer any health insurance. Being under age 26, the son is by law eligible for coverage under the Company A plan, but the health insurer in the Company A plan generally covers non-emergency services only if they are done in one of their clinics, which are all located within, say, 60 miles of Company A. This means the son is eligible for coverage that doesn't really provide him coverage where he lives. If the son signed up for coverage in the exchange/marketplace in the state where he works, would the son's eligibility for the Company A plan coverage make the son ineligible for the premium tax credit and subsidies through the marketplace?

Thanks, Masteff, for the links. I see that states actually have laws to nullify an illegal-in-that-state marriage of persons who were legally married in another state, that states have addressed those laws at least as recently as 2010, and (most importantly to me) that those laws are applied in real situations, such as, determining who is heir to the estate, eligibility for veteran benefits, etc. It's not something out of the distant past, and it may be a factor for same-sex marriages. What I'm getting at is if the spouse is the default beneficiary in an ERISA plan when the participant did not file a form designating the spouse as beneficiary, then it may be prudent for the plan to ascertain whether the participant and alleged spouse were legally married under the laws of the state in which they were living at the time of death. (It doesn't matter which state the plan "lives" in, right?) Or is it prudent to simply make the distribution to the grieving spouse without unnecessary delay unless we have some reasonable question or suspicion that the marriage may be null and void under the laws of the applicable state? We do like to avoid giving the benefit to the wrong person and having proubles with other claimants down the road.

I agree with ESOP Guy. If the participant was eligible for a lump sum distribution when he accepted it (signed the forms), then the plan can't take it away after the fact. And unless it's typical for the company to take six weeks to process a proper distribution request, they shouldn't delay further with the direct rollover to the IRA.

OK. What about marriages of first cousins? I read that it is legal in 25 states and in 6 others under certain circumstances. The other states prohibit it. Has anyone heard of a case in which a prohibiting state decided (by policy, procedure, benefit denial, etc.) not to recognize a first cousin marriage that occurred in a state where it was a legal marriage?

MoJo's post (post #7) here: http://benefitslink.com/boards/index.php?/topic/53871-doma-change-and-effect-on-retirement-plans/ gives the current status and indicates to me that the "privileges and immunity clause" he mentions will prevail.

I agree, MoJo. I was wondering about issues other than same-sex marriage where a state may have disputed the validity of a marriage in another state that had different marriage laws. Meaning, is same-sex marriage the only reason that any state has used to invalidate a marriage from another state where it was valid. I think your response covers this issue well, and it answers my questions. Thanks.

Just curious. I am led to believe that marriage laws vary from state to state. Prior to June 26, was there any recent case (say, in the last 50 years or so) when a state did not recognize or otherwise disputed the validity of a marriage that took place in another state, where the marriage was recognized as legal in the state where it was performed?

Good point, and an important one. I didn't see this mentioned in the first round of commentaries.

Maybe the company should have checked with the programmer before making promises that it didn't have enough staff to meet. Either that or have the programmer drop the other projects (they can't be that important) and make the payroll changes the programmer's top priority. People who sponsor and run plans really need to check in advance on the nuts and bolts required to implement changes, instead of blindly making changes that they think will magically happen.

Thanks for that, BG. I agree it could be a plus if your timing is good. Of course, the benefit is reduced, because the loan repayments are after-tax dollars (another record keeping expense and distribution complication for the plan). Masteff - An interesting article. Seems to focus on overall results. Participation might increase. Average contributions do increase, although they do not distinguish how much of this effect is because higher paid's get to defer more. They conclude that the positive effects of loan availability on savings rates are experienced by all participants, whereas only a few take the loans. I'm not sure what this means, but again I suspect that a major effect is that the cap on savings rates for HCE's is higher. (They don't discuss this.) And then for the 2.5% (which seems like a big percentage) of participants who default, there's a big cut in retirement benefits and immediate taxes and often the 10% penalty. Thanks again for the comments and the article. and have a nice day ... or else.

I agree, BG, that it's probably a perception of increased participation (as masteff has shown as I type), and I agree that more plan expenses means a boost for the economy. After all, THE issue is jobs (at least it was at election time). I look forward to reviewing the paper. Thanks, masteff. Obviously, I think that a retirement plan is to provide retirement benefits and not for a "rainy day" fund. But others may like the added fun of issues like those addressed in this thread. From what I read (and have seen), the surest way to high participation rates and high HCE deferral rates is to offer a safe harbor match on deferrals to, say, 5% and implement auto enrollment at the 5% deferral rate. Few people choose not to participate, and not having to determine if HCE deferrals need "correction" at the end of year reduces plan administration time . From a fiduciary point of view, I will read the paper masteff linked to find out how loans enhance anyone's retirement benefit. I can see how a loan adds a risk of reducing the borrower's retirement benefit (money not invested, or worse, don't pay it back). If it would be prudent for a non-banker plan sponsor to hire appropriate help to set interest rates and administer loans and avoid errors (payroll deductions missed, etc.), should those expenses be paid from (reduce) participants' accounts? Thanks, again.

Someone surprise me and post a link to a study, report, article, whatever, that shows that allowing loans from a Retirement plan enhances or may enhance the benefits that any participant in the plan can expect at retirement, compared to not allowing loans. (My apologies if that sounds grumpy.)

Now, you're down to 4 days. Having never heard of this before, I asked the accountants, who said, "Sure, we've been filing them for the ESOP all along." They're sending us copies of the filings for the ESOP's records. With a sigh of relief, I thank you, TPS, for posting this.

And ... Are there any other surviving children of the participant? I'm not sure how to prove there aren't. Signed affidavit of son maybe? Plan sponsor may want legal advice on this, to avoid having to satisfy a currently unknown claimant who shows up 5 years from now.

Agreed. You have to do what the Plan Doc says. Now, it may specify that the child(ren) inherit in the event of no spouse and no designated beneficiary, so all may be well.

agreed

Whatever the situation, you have to do what the Plan Document says you have to do. If it's a situation where the participants get to vote, then you have to count their votes (whether they can affect the outcome or not). So, I think you're still looking at whether or not the pass-through voting applies.

rcline46 has given you your answer. If the plan is intended to provide resources at retirement, then don't add stuff that detracts from that goal.

For number 1, I agree that they are a nightmare. It may help to remind the individual that taxes are due whether or not the checks are cashed.

Participant takes in-service distribution now and rolls it into, say, an IRA. Since the participant is still an active employee (and not a 5% owner) and the participant has not given proper notice of his retirement date, the plan has no reason to segregate anything and must treat the entire distribution as rollover eligible. If the participant reaches age 70.5 and retires later in 2013, then the participant has to take an RMD for 2013, which amount is based on his 12/31/2012 plan balance. If at the time of the retirement, there's nothing left in the participant's plan account, then the plan advises the IRA that a portion of the rollover was an RMD and not eligible for rollover, and the participant has to go to the IRA and get back the RMD amount, no?