GBurns

This is just my off-the-cuff unresearched opinion. Since the refund is based on a formula that includes the premiums paid and claims made/not made by the participants at certain known times, the refunds should be distributed to those same known participants. Where did you see this DoL opinion? Is there an IRS "opinion" concerning the taxation of this refund?

Your post is titled "RFP for Insurance Brokerage Services" and you then list 4 firms, 1 of which seems to be a TPA. What do you mean by "Insurance Brokerage Services"? Why would you need a Broker rather than an agent, insurer, TPA, PPO or product provider? How large an employer are you? What state of domicile? What products? Fully insured of self-funded? More info should get more responses and suggestions.

Shouldn't the amount of an employee's deferrals be taken from the payroll register rather than from the Investment Statement?

As long as the plan is compliant, amounts that are reimbursed for eligible medical expenses are not included in the gross income of the employee and therefore is neither on a W-2 nor a 1099.

Traditional Section 105 MERPs should not have a "use it or lose it" feature even if only because there is no need to pre-fund it, there are also no need for individual employee accounts that have balances to be lost. An HRA is a section 105 MERP with additional restrictions, benefits and conditions.

A large number of the larger health plans make it mandatory that you either take the health insurance as it is offered or none at all. They have language that states that to receive health benefits you must participate in the Cafeteria plan for any portion for which the employee might be responsible. Having 1 or few employees paying after tax while the other pay pre-tax presents a problem for payroll processing and for reconciling the insurance billing statements.

Which plan, the Cafeteria Plan or the Health Plan?

cease I am curious as to this person's reasons for wanting to participate in the Cafeteria Plan? Is is so as to be able to pre-tax an employee portion of insurance premium, or FSA or for DCAP?

Isn't this where the whole CODA thing started, with the choice of deferring a bonus ( a christmas bonus, if I remember correctly) to a pension plan or taking the cash?

What is a "unit" employee? The facts and circumstances are not very clear to me. For example, you state "the plan provides benefits in certain cases to employees pursuant to a CBA", does that mean that not all employees are covered by a CBA? All employees and employers in a multiemployer plan should be subject to a CBA. Also, being or not being jointly trusteed has nothing to do with being a multiple employer plan as far as I can remember. Maybe you might want to rephrase your post etc., that way you might get more responses.

This is something that your client most likely will not be able to do. Aside from it being very unlikely that there will be anything that is reimburseable, the maintainig of compliance will be very difficult. I have not seen any of the programs out there that are compliant and providing a single case TPA service would not be cost effective. The IRS has in the past tried to warn that this is a difficult task and issued a CIP trying to explain: http://www.irs.gov/businesses/article/0,,id=97388,00.html There were also some Tax Court cases involving trucking and delivery companies in which the same and similar issues were raised. In general, it can very rarely be done with small tools and tools used by employees. There definitely is a problem trying it with tools already purchased and in use. One problem being that the employee most likely already took a deduction on his tax return for the items which would render them not further reimburseable. Large tools and independent contractors have other issues.

Based on the court decisions, it depends. I would think that the current provisions rule unless his SPD, enrollment explanation, PD etc at the time of enrollment did not make provision for changes and are not in conflict. If there were no provisions for changes then the standards of the 70s would rule or worse he might have his choice.

My first thought is that 2 Plans should remain in force for the 2 separate groups. The members of Union A are not participants in the Union B annuity fund and therefore have no other vehicle to which contributions can be made on their behalf except the old Union A pension plan. There is also the fact of the CBAs which would have to be rebargained in order to make the change. Unless the CBAs are no longer valid because of no sucessor clause etc. To me it seems simplest to have Union B adopt the old Union A plan and continue the existing arrangement assuming that the CBAs and reciprocal ageements have survived the closing of Union A.

Julie It looks like you already have wording that is standard, but I get the feeling that your company has not been enforcing it and does not really want to, except for the extra cost. Is that correct? Not knowing the exact situation, I also feel that many of these employees are working with you partially because of the availability of this spousal coverage. It might really cause a problem if you now started to enforce this wording. Is it possible to increase the cost of that spousal coverage enough to cover the expense but not enough to force them to have to drop the coverage? Or what about an Occupational Rider, to cover those occupational injuries or even occupations, at a sufficient additional cost since raising the cost of spousal coverage across the board might be bad for other employees?

After reading the many well reasoned posts, I wonder if this action is really necessary, if as has been pointed out, it is even allowed. Would it also not be a deterrent to participation? To me this seems like an unnecessary overkill. This fund has an average participant balance of only $25,000. I do not think that this is the sort of plan participant or transaction type that the SEC is worried about nor does it have the potential to be, unless the true picture is really a few very large accounts and a large number of very small accounts, making the average misleading. The burden by the SEC is enough anything else stinks.

So, it "is available to all CO's", but is it included in all CO's documents? That was the real point of the question, Can 1 CO have something that any other CO does not have? WDIK I try not to disappoint. A trademark of good service.

I guess I do not understand your post. You state that Companies A and B "both participate in the same MEP". But, you also refer to Company B as being "this client organization (CO)". I usually, if not always, see the term "client organization (CO)" used in reference to PEOs. If this MEP is a PEO MEP, Can Company A or any other CO have verbiage in their Adoption Agreement and eligibility or vesting requirements that the other "co-sponsors" do not have?

I doubt very much that you could draft documents to get around state MEWA regulations. That is probably why most are under the DOL after meeting the DOL requirements. All the MEWA section 125 plans that I have seen are all DOL none are state. I would not assume that even a state that allows MEWAs would allow this arrangement as a valid MEWA. To just assume that the arrangement is valid seems foolhardy when there is so much pointing to the fact that it might not be possible to have the arrangement. Check your state MEWA requirements to see if your state even allows MEWA. If your own state does not allow MEWAs then you could draft all the documents in the world and still would not have a valid arrangement. Then check to see if any of the states that allow MEWAs would allow this arrangement as a MEWA. Chances are that they would not. So draft all you want, it would still not be valid.

Wouldn't a multiple employer section 125 plan set up by the PEO be a MEWA? If not why not? If it is a MEWA, it would most likely be one that is subject to state regulation. Will it meet state requirements? If it is a state that does not allow MEWA, What happens? If the arrangement either does not meet state requirements or is not allowed, it does not matter which company the employees work for because there would be no valid plan. That is why my first response raised the issue of whether or not the arrangement could even exist for any employees to participate in.

I thought that CO probably meant Client Organization, but could not see where it came into play regarding the post as written. However, if I had read between the lines, as Mbrockway did, and given some leeway, then I would have seen that it makes sense that this post probably involved a PEO. Corporate Orangutan = PEO MEP

I knew that I could count on you to clarify the post. Now I understand much better.

What is a CO??

If you go by what is on their website, the materials used at conferences such as the recent Galen event, their press releases and what they have given to at least 1 employee group, their Plan was not designed with FSAs in mind nor compliance with the Revenue Ruling etc. They would not have caught it if you had not raised the issue and I do not think that they have corrected anyone else's plan because I do not think that they yet know what to do.

Sounds like there are some companies that should seek legal advice about how to correct the problems. You cannot just say "oops". It seems that the Plan Documents either do not allow both or more likely have no "ordering rules" and even then under either scenario were not operating in compliance with their Plan Documents. The need for "ordering" was clearly pointed out by the IRS and by many explanatory articles written since.

HSA is a possibility but only if the HDHP is either available or desired.