GBurns

MaryC, Look to the Revenue Rulings etc and many articles written explaining. Also note your own comment..."if permitted by the FSA plan." If not permitted, then what happens? If not permitted, Why would there be both? mikeak, You say that your Definity has FSA first. MaryC says her Definity has PCA first. ty07480 says that the rep said that the FSA was not allowed to be first. The Definity site implies PCA first. It seems that there is some confusion as to what is really allowed.

You are probably right, your HR people might be surprised. Make sure you tell them. This might not be what your company thought that it was buying. There is also the question of whether or not an FSA can even be used with this type of HRA arrangement (the PCA) in the first place. If it can be used, What do the various Plan Documents state about the ordering rules, FSA first or HRA (the PCA) first? All of this is beyond the "say so" of any sales rep. and should be taken to a higher level. There are written rules to be followed. ******* MaryC If the portion that ty04780 has to pay is, for argument $2,000, your example seems to say that $1,500 will be paid from the PCA leaving a balance of $500. In your example the PCA pays first, although this might not be what the FSA PD states. Even if this was then submittable to the FSA and paid, there would still be $250 left in the FSA which ty04780 is stating will be lost. How can ty04780 save this $250 from the "use it or lose it" of the FSA?

If, as Oriecat puts it, you pay your portion which you say will be less than $750 and submit for reimbursement through the FSA, How will Definity know? Or is that when the Doctor bills them as the insurance company they (Definity) then decide what is your portion and unilaterally take it from your PCA thereby giving you no options? What does your SPD etc explain? Is there a conflict between any documents and the enrollment explanation? In any case, you should discuss it with your Benefits or HR people, because this might not be what your employer thought that they bought into. What state are you in?

What does it matter what "they" or "it" is called? They are called whatever the particular provider decides to call it, whether it be XYZ Company Employee Retirement Health Trust, a VEMA, a REMA or whatever. Try a simple Google search for "pre-funding retiree health plan" and you will get some idea of the number of various names and code sections that they are done under. Not all will work in all situations or for all types of employers. Some that you will find have already been "disallowed" by the IRS for various reasons so take note of the 401(h) and Cafeteria Plan Hybrids. Here is a brief overview that you will find in th search: www.npelra.org/2002conference/retireehealth.ppt You might also want to look at the VEBA Forum on BenefitsLink.

Yes such plans do exist.

I am not clear as to whom you are referring? By "its" are you referring to the sponsoring organization as a participating employer, or to the MEWA itself (which should have very very few employees eligible for the benefits? In fact what do you mean by "sponsoring organization"?

Aside from basic logic I thought that it had been well settled in the Courts etc that the employer cannot become a leased employee. A good explanation of this and related issues can be found in the Q&A Column "Who's the Employer", note Q. 68.

Steve72 Who really does the enrollment, the employer, the health plan or the insurance provider (for insured plans)?

I think that it is important to point out that the Stop loss carrier has not said that the procedure will not be covered, the post said that it was the TPA who made the statement. I suggest that you quickly submit a request complete with all the relevant procedure codes and get the answer from the stop loss carrier. The TPA cannot speak for the insurer.

What?? .."the client has just informed me that the deposit didn't take place after all! ". Do you really mean that the client was not originally able to look at the cancelled check and the account statements and determine where the check had been used? Fishy!

To me the more important question should be.. Can any of these employees (of the client organization) really legitimately participate in this flex plan of the PEO in the first place?

FIBI is Fringe Insurance and AGC is Associated. I have dealt with both, and others who are minor players, but I prefer Fringe especially for their record of support in DOL audits. Do not like their compensation plan as an agent, but there is not much of a choice if you want something that will go smoothly in all areas. Fringe also has a broader portfolio and support materials etc. In the past they did not mind assisting the agent even if the agent wanted to use a Health Plan other than theirs. Now that they have their own, I do not know what their attitude is, but since their Health Plan is not all that good (and my knowledge of it is not current so I could be wrong) , they should still be willing to assist.

Why not just follow the time tested and well audited procedures, plans and PD etc as used by the larger servicers/providers of DBRA and SCA compliant plans, such as FIBI and AGC?

More information in your post would have been helpful, such as whether the info is being requested from the insurance company (if fully insured) or the Claims administrator (if self funded) or whether this is FSA only info from the FSA Administrator. What is the employers relationship to the Plan? What type of Plan? from your post all it seems that is being requested is summary info not individual details and no ICD etc. If the info is be for a valid purpose such as utilization review and does not have any personally identifiable information (such as which claim or item belongs to whom, or what any individual did etc) there is nothing wrong with the Plan Sponsor getting this information. The employer, if not also the Plan Sponsor should have no need for the information and therefore should have no right. But, the Plan Sponsor does.

If you blindly follow 75-241 then you could be also saying that it negates section 125. However, 75-241 was before 125 and also before even 105 and 106 as we now have them, thereby making most of, if not all of 75-241 obsolete for most issues. You also should note the facts of 75-241 and why 61-146 was distinguished. Also I never said and DBRA also does not say that cash is not taxable. Cash payments for services rendered and paid on a payroll are always taxable. This also applies to the health benefits amounts that are converted back to cash whether periodically as in PLR 200007021 or on termination as in your original post. The issues raised in your post were "the issue of whether or not the arrangement involves a cafeteria plan arises. I believe that a cafeteria plan is required to have a written plan doc. for tax purposes..." In other words, as I read it, you were questioning the need for a section 125 Plan and whether or not a section 125 plan needs a PD. To find out whether or not a DBRA health plan falls under section 125 you need to not only look at the Plan Document, you need to read 125 and 29CFR3.5. In a simplistic manner, Does the employee have a choice between cash and a qualified benefit? Not in a DBRA plan, therefore no section 125. Pre-emption might have been a bad choice of words. What there is are plan designs that are not found outside of the Prevailing Wage segment. These plans have to meet not only the IRS and ERISA requirements but have to do so without running afoul of the Prevailing Wage requirements and DOL rules. To find where these exist you would have to read DBRA preferably with a specific item in mind. Just follow the links.

Very little of 105, 106 and 125 applies. DBRA have their own rules and pre-empts anything else unless it states so. A good place to start is with the DOL itself. This link should help although there is substantial additional guidance that they have issued in Departmental rulings etc. http://www.dol.gov/esa/programs/dbra/index.htm

A Promissory Note is a promise that the issuer will pay the holder the money when due. In this case the issuer (the Company and Plan Sponsor) is promising to pay the holder (the VEBA) an amount of money which it cannot currently pay at some future date. As far as the facts posted are concerned there is no mention nor a need for lending of any money and definitely no lending by the Plan Sponsor to the Plan or even vice versa. The Plan Sponsor might just want to give the Plan Participants some assurance that the VEBA will be funded one way or another, so here is his promise in writing. It might even be possible for the VEBA to use the Note as collateral and borrow the money. By "contribute a promissory note " do you mean that the Company issues it to the VEBA or do you mean that the Company assigns a note previously issued by a third party to the Company which is then endorsed by the Company and turned over to the VEBA? If the Company contributes a third party issued promissory note it could be deductible (provided the VEBA can accept it) but the value would have to be appraised etc and probably discounted for issues of collectibility etc much in the same way as any other tangible appreciated asset.

What did I miss? If the Plan makes a profit (as per the original post), What are you referring to when you reply stating "if the investment causes a loss to the plan" then later state "disgourge the profits made in the Ponzi scheme" ? If the Plan made a profit by being an early investor then there would not be any loss to the Plan. If there is a loss to a Plan then there would be no profits to disgorge.

This looks like some sort of Prevailing Wage Plan such as a Davis-Bacon or Service Contract Act and Related Acts situation, although it could also be a non-federal plan from a similar local or state PWP. If Federal, in general as long as the employee get the required Total $ per hour it does not matter when it is paid as long as paid by the end of the project. It is neither a 105 or 106 issue it is a DBRA and DOL "bona fide" benefits issue. If not Federal DBRA, then the taxation etc is different and it should be a 125 and 105/106 plan issue. Some guidance might be found in PLR 200007025 regarding what happens when the money is not used for health & welfare benefits but is paid out as cash.

There were a number of articles published in "Benefits Buzz" over the last few days which included comparison charts.

What proposed legislation?

When you contact them, it would be good to get the full opinion letter that they claim as legal support and not the summary. Also try to get an explanation of why they no longer use the original KPMG opinion Letter. Did KPMG withdraw their position?? But most of all get a legal opinion on the Opinion Letter. You might also want to look at PLR 200007025 regarding plans for 2% shareholders.

By "involuntary" do you mean that some other entity (other than yourself) wants to unilaterally cash out your account?

Aside from Uniform Coverage, an FSA has to show the characteristic of insurance namely the risk. If the broker or anyone else got involved (assuming that it was legal to do so) this would or should remove the element of risk for the employer. Without the risk no chacteristic of insurance thus no compliant FSA. It probably would not cost the broker much to do this, but it might cost the employer and employees a disqualified plan.

Thanks for the correction. HSAs are section 223 not 105(b). What the medical expenses will be, I do not know since I have not yet read the new section. What rules will apply when they are offered under a section 125 plan will need clarification.