GBurns

There is no such thing as a 105(h) health plan and I have never seen a way to set up a plan "under 105(h)" either.

The fact that transportation benefits are not allowed under section 125 does not stop the benefit from being provided on a tax free basis to the employee. You could use section 132. A similar situation exists with vacation, pension benefits and other items. There are many ways to skin the cat. In both your posts you have limited yourself from offering benefits on the false logic that benefits can only be offered either through section 125 or 401(k). This limiting is an example of what I mean by bad plan design. Many things can be offered just as effectively under another section of the code but you can only see that to which you are accustomed.

It should be a benefit from your accident and health plan and therefore excludible from the employee's gross income under 105 and 106.

But are you using "a standardized master trust product " and is it less "confusing and time consuming regarding allocation reports, posting transactions, year end testing, etc." as asked by the original poster?

Now you have caused me to have to go and research this story and your report of a settlement made for her care. I am now curious to see why this settlement was not used for her care and why the court disregarded it, assuming that is what it was for etc etc. As for "mercy killings" there has never been "a rush". As soon as the idea got some publicity the outcry stopped it. There have been ver few assisted suicides and most of them involved the same doctor, who was stopped by the actions caused by the outcry as soon as it became public. Using the term "rush" is exactly the type of emotional, irrational and inaccurate reporting that stops a lot of progress that could be made by debating, researching and evaluating things so as to arrive at a solution. However, you are right in that one day we will be regarded as having been heartless and cruel, but it just might be for our lack of a structure that takes care of our citizens whether young, elderly, uninsured or in poverty and/or homeless. Our lack of regard for humans and human life which already permeates our very materialistic society is why there is this lack of attention or care for this woman.

I guess that we will start seeing a lot of lists as many "advisors etc" jump on the "expert" bandwagon. Looking at the list I wonder what medical condition makes "denture adhesive" and "medicated bath products" okay but "hot and cold compresses" and "arm and leg braces" not?

Katherine, I have to disagree. I do not see anything in our tax laws that would prevent the scenario that you say is used in Europe to be used here. And I do not see what limitations you see that would be exampled by 401(k) and 125. All I see is a failure of benefits and compensation plan designs. For example HRAs are getting a lot of press but there has been no change in either the IRC or Treasury Regs. However, HRAs have long been allowed and the IRC change that allowed them was from around 1976. Maybe you would expand further on what you see as limitations in our tax laws.

Dave, This lady did not choose anything, life or otherwise. When she should have or could have, she did not and so the choice fell to others who now seem to have all failed her, including society in general. ccassetty, RE: "This is just BS, pardon my French. Because someone trusts a flim-flam man who takes their money, they got what they deserved and person who stole the money shouldn't be held accountable because is was their decision to trust him?" " Because someone chooses a physician who turns out to be grossly incompetent, they should have no recourse because they chose the physician? That is the point. The person who made the bad choice will be long gone and will have no recourse. Unless they can do it from the grave. That is why I advocated a rational choice in advance of the need NOT a choice made as a matter of trust or love. It is sad that this cruel method was chosen, but we (the society) are the ones who will not allow assisted suicide or mercy "killings", either of which would have been easier on this lady. We are also the ones who are so civilized and religious that we dare not trust anyone of us with the power to make those decisions either. We cannot eat our cake and have it too.

Someone still has to make the decision. Who? The hospital or Doctor who have income considerations? The spouse who might be either too emotional to be rational or might have a secret to protect? Parents or relatives who might have secret agendas beyond inheritances? There should be someone and not left to chance. The only thing to do is to set the parameters and conditions before you need them. If the wrong choice is made suchas choosing an idiot husband only because you think that he loves you, then that is what you chose and you live or die by the consequences of you adult rational decisions. The alternative is indefinite "life" with uncontrolled "care" at exorbitant uncontrolled prices which will be left behind for all others to pay. The only ones who will benefit are the unconcerned "care givers".

Add Revenue Ruling 2002-58 to your reference material.

There are many issues to consider. You might want to start here which although not exactly on point has some relevance in the logic and cites: www.irs.gov/pub/irs-utl/chap801.pdf http://www.irs.gov/businesses/article/0,,id=97363,00.html

Deductions are not usually, if ever at all, deductible 404 they are 162 as posted by jgordon.

This is probably why many advisors etc have advocated the setting up of Healthcare Surrogates with a Power of Attorney etc. You do it while you are sane and in good health and able to rationally choose someone who you feel will do either what you told them or do what they thing is the right thing. This gives a chance that the decisions will not be emotional or selfish.

The IRS and the courts consistently said that you cannot retroactively adopt a plan and you cannot cover expenses incurred before the effective date of the plan. At this IRS link you can find their Coordinated Issue Paper on the subject and which will give you some guidance: http://www.irs.gov/businesses/article/0,,id=96445,00.html

The situation you outline seems quite common. That is what you get for believing sales presentations and not doing proper research. While the outsourcing of DOI might be condoned by the DOI this is really irrelevant. Outsourcing does not mean that there is either proper coverage, any coverage at all, or that premiums get paid. The only entity that knows if the PEO pays premiums etc would be the WC insurance company/companies. What have they said about the track record of this PEO? Aside from the "up front" deposit, How do their rates for the same coverage etc compare? As for "handling all including business and employer liability legal fees, COBRA, HIPAA, health, 401(k).HR, employee manuals, new hire processing, complete HR outsourcing including covering all HR related lawsuits etc for only 20% admin fee?" Who and what makes you think that they really do these things and will do these things legally? Listing possible services is not the same as being able to provide and not the same as really providing. Remember the recent Revenue Ruling regarding PEOs and 401(k) plans? The same situation exists regarding health plans and section 125 plans. Are they providing benefits as in being the Plan Sponsor or are they providing as in being insurance sales agents? Will there be a Trust or VEBA etc etc and will whatever it is be compliant etc etc. As for "covering all HR related lawsuits etc ", I suggest that you ask a lawyer and do a search on places like findlaw.com and other legal websites to see how often it was the client who was left standing alone as the common-law employer.

I thought that Cal-COBRA just like COBRA applies to employers not insurance companies and HMOs. I thought COBRA applied to insurance coverage/arrangements not to health plans. The employees are sited in CA and are subject to CA labor and many other applicable CA laws and ERISA does not pre-empt state law in many cases. Whether an out of state contract or not insurance contracts covering residents of states are covered by state insurance laws in most states. ERISA does not pre-empt state law regulating insurance, it might pre-empt regarding benefits provided by a plan. A plan is not the insurance contract. The benefits from a plan are not the benefits from the insurance contract.

IRC 401 Even if the SPD and PD etc permit this apparently discriminatory action, are you saying that there is nothing in the Code or Regs etc that would prohibit this? Even if nothing prohibits this do you not think that such an action would leave the employer (Plan Sponsor) open for litigation for descrimination? I would consider the suggestions by oxdougw and Blinky as the best course of action.

No! Not similar to an FSA in any way. Note the words attributed to Mr. Beker and the wording of the Ruling "Mr. Beker mentioned two caveats, however: first, a health FSA cannot reimburse insurance premiums (any such reimbursement would need to be made through the POP portion of the cafeteria plan)". However, I think that you finally at least understand that only premiums that were paid for with after-tax dollars could be eligible for reimbursement.

Is this a Trustee of the Fund or a trustee of the Plan? A Trustee is not necessarily an employee of an involved employer (Plan Sponsor), the Plan or the Fund. A trustee does not have wages but might have a loss of income. Only employees have wages. If the Trustee also happens to be an employee you still have 2 separate issues. If it is allowed by the PD etc to reimburse Trustees for loss of income and expenses etc then you have to verify the loss etc by whatever means possible and a certified payroll would be a good source. An employee's wages is not limited to either the DBRA or other PW rates, it is only a minimum rate. In any case it should be stated in the PD as to who is responsible for these expenses. It might be the Plan Sponsor or Plan Administrator and not the Plan or Fund, terms which you use interchangeably.

Unless there will be employee contributions for medical expenses, why is the FSA needed?

So there it is, one of the many that explain that you can pay for the spouses premium on a pre-tax basis, whether for a group or individual plan but none say that the employee can pre-tax for the employee (or anyone else) then get reimbursed. Note the last sentence re double-dipping. Double-dipping applies whether for spouse or for employee. In simple words if it is pre-taxed it cannot be reimbursed. I think that the main reason why there is misundertsanding of the issues is the use of the term "reimbursement". When an employee has a pre-tax salary reduction under a section 125 POP plan and which amount is used to pay the health insurance premium, the term reimbursement should not be used. It is misleading because it implies, to many people, that it is the employee who "gets back" money whereas it really is the insurance company or service provider being "paid", the technical term for which is a reimbursement. The pre-tax salary reduction is used to reimburse (pay) the insurance company as premium not the employee for anything. This POP treatment is different from the treatment of the pre-tax money that is taken from the employee for holding in an FSA ,which money is used to reimburse the employee for any after-tax eligible expenses incurred. Pre-tax reimbursing after-tax, no double-dipping. Note that insurance premiums whether pre-tax or after-tax cannot be run through an FSA anyhow.

How does the employee or any other policy holder have any "amount at risk"? the only entity with an "amount at risk" is the insurance company. Also if this employee converted a policy held under previous employment, What is the relevance to whatever this employeee now has under this new employer's benefits plan? What do you mean by "because his group plan's risk begins at a much higher level?"? How do you get a connection between an individually owned policy and the employer group plan? Insurance rates in a group plan are usually tied to age.

I guess that the GAO found good reason, regardless of Draper v Baker Hughes, to put the following in their recent report on Small Business Health Coverage Requirements: Federal Requirements Restrict Variation in Premiums for Individuals with Employer-Sponsored Health Coverage Federal requirements do not address how premiums for employer-sponsored health coverage are set but rather HIPAA’s nondiscrimination provision prohibits, for businesses of all sizes, premiums from differing for similarly situated individuals on the basis of health-related factors.22 Similarly situated employees might share the same geographic location or employment status. HIPAA does not prohibit health insurers or employers that self-fund from taking into account the health of the employees and their dependents when setting the group’s premiums, but it does prohibit them from charging employees or their dependents different amounts based on this health information. Further, HIPAA does not prohibit premiums from varying among employees for other reasons. For example, employees in different employment categories, such as those in different geographic locations or with different employment status, may be charged different amounts for health coverage. The full report is viewable at: www.gao.gov/new.items/d031133.pdf I guess different gegraphic locations and different providers and different costs can and should make a difference.

In reading summaries of Baker Hughes it seems that charging different premiums per location, whether branch, incorporated division or subsidiary which would all be part of a "controlled group" should not be done for coverage whether COBRA or not. So it seems that there should only be 1 National rate and 1 COBRA rate. Did I read right? Here is a summary: http://www.benefitsolved.com/resources/caseLaw/draper.htm Are there any other cases?

It is usually different COBRA rates for different areas or locations etc etc. However, it should never be the employer calculating COBRA rates, it should be the plan actuary or claims administrator's actuary.