GBurns

vebaguru, Thanks for this post. I knew that eventually an experienced lawyer would make a comment regarding the employer's position in an illegal situation. Many people seem to think that the employer could just sit back and say "I didn't know" and that would be all to the matter.

There are some issues here that I am not clear on. If the employer is now bankrupt, are they continuing under the auspices of the Bankruptcy Court or has it gone out of business? If under the BC , What is the Trustee's directive? This was a single employer plan, there is no mention of a successor employer, Who will be employing the former employees? If the employer has gone out of business, then there is no more CBA. If they have not gone out of business and there is no succesor employer, it should mean that they are operating under the BC Trustee and the matter of continuing or negating the CBA and terminating the plan etc etc, rests with the Trustee (or Judge). If the employer has gone out of business, What will this member of the controlled group be taking over and How was it transferred, asset sale, stock sale ?? Assuming that none of the above matters, there is the issue of the conflict between the PD and the CBA. Other than an IRS audit, the various conflicts will only be settled as they cause problems and get questioned. How a Court will rule is speculative although most seem to be coming out in favor of whatever was the most likely interpretation by the employee. In this case since neither the PD or CBA are usually perused by the employees, there remains the question of what they were told (such as in open enrollment) and how (such as in group meetings and SPDs).

I do not remember any rule that would be violated, but, I think that the employer might be creating an unnecessary reporting complication. If they deduct beyond the 6 months and it continues long enough to be reportable on the 941 (and state forms for IT and UC ) for more than 1 Quarter, How will they make the adjusting entries on those forms? What happens if it involves a year end and beyond the 1st Quarter of the next year? Can the adjustments be made easily? I think that if you review the Quarterly filings to see what would have to be adjusted, you will find that it is not worth the effort to deduct beyond the 6 months. By the way, What about Federal Withholding?

We are "friends" (I think), we just write this way. The relationship reminds me of a case that I had in court, a few months ago, after which 1 attorney called the other a ##### and expressed the desire to kick him, I on the other hand stated that the performance of all the lawyers was so poor none of them should have the audacity to charge their clients and I blamed the Judge for being idiotic. At a subsequent meeting to discuss the reversal of that judge, by the Appeals Court, I learned that those same 2 lawyers were best buddies from law school days and had gone boating together the previous weekend. The moral is tear his liver out in court but he can come to supper later. By the way if mbozek is female, I would consider making up.

When you buy a used car or other pre-owned item, How do you determine if it was stolen and that the seller is the rightful "owner"? If the item that you bought turns out to be stolen, do you not think that you would or could be charged with being the receiver of stolen goods? Caveat emptor! It is the buyer's responsibility to check any and all claims made by any seller or promoter. Regarding the compliance of a VEBA, and the legitimacy of any items provided thereunder, is a very simple matter that only takes a few telephone calls to the DOI, DOL and underwriting insurers, a website visit or two and the requesting of a few items such as a copy of the DOL letter and M1 filing, a copy of the insurance policies. It is also common sense that neither insurance agents nor Trustees nor any sales reps (by whatever name called) sell VEBAs. That should be the first warning sign.

The employee requested their "designated record set". A "designated record set" is the information used to make coverage limits and claims adjudication descisions etc. No employer has need or use for this info and both state privacy laws and HIPAA prohibit this. An employee of the plan sponsor/employer will have some PHI such as enrollment info but not this. Plan functions performed by employees of a plan sponsor or employer do not include coverage limits and claims adjudication and they would therefore have no need for the info in the "designated record set".

Steve72, You can act as a father and act as a husband at the same time, that does not make both things be the same. You can own all the stock in a company and still be Director and employee, Again, doing two things do not make the things the same. You own all the stock and you are not the Company even if you are the sole Shareholder and sole Director and even sole employee, that is why the company has to have its own FEIN and bank account etc, TWO separate entities. ERISA (and HIPAA) state " TITLE 29--LABOR CHAPTER 18--EMPLOYEE RETIREMENT INCOME SECURITY PROGRAM SUBCHAPTER I--PROTECTION OF EMPLOYEE BENEFIT RIGHTS Subtitle A--General Provisions Sec. 1002. Definitions For purposes of this subchapter: (1) The terms ``employee welfare benefit plan'' and ``welfare plan'' mean any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services, or (B) any benefit described in section 186© of this title (other than pensions on retirement or death, and insurance to provide such pensions). The fact that a plan is "established or maintained by an employer" simply means that it is a separate entity. That is why under HIPAA the plan is the "covered entity" but the employer sponsoring the plan is not. Two separate and distict entities. The fact that some employees of the sponsor will have access to PHI still has nothing to do with the issue. Read the HIPAA Q&A and the very many legal opinions that have been written about the need for a Business Associate Agreement to cover such handling..

Is this self funded or fully insured? If you are going to let this participant be reinstated under the plan, do you not think that it would be gross discrimination to change the terms of coverage just for this employee? The person is either going to get the plan that everyone similarly situated, or in the same class, gets. If the coverage is guaranteed issue, how can you change it? What you are adding is essentially a pre-existing condition. If the coverage is fully insured, how and why would you want to try and change the issued policy which was issued by the insurer not by the employer? What is your state law on pre-ex? If the person suffers from something that falls under ADA, why open a big can of worms?

Yes and then there is HIPAA and COBRA. You would not believe the confusion that I am seeing in the self-funded arena. I have seen 2 TPAs who demanded that the employer (the plan sponsor) must sign their (the TPA's Business Associates Agreement). Everything was held up until the lawyers finished laughing (mainly at how much to charge and whom). I have seen IPOs (Drs practice) refusing to submit claims to TPAs until they finished getting legal advice. There is 1 Claims Administrator who is holding EOBs until someone ensures that the employees will not let the EOB (PHI) get into wrong hands, one stated wrong hand is the FSA TPA.

Go to this HHS link, click on "Your Frequently Asked questions ...." then do a search for deignated record set and you will get the best answer: http://www.hhs.gov/ocr/hipaa/ IMHO, it is any and all information that is used in making any and all decisions regarding claims and health plan participation. Are you a covered entity or a business associate of the Plan? From your post I get the feeling that you might be the employer, if that is so then you should not have the information, if you do I suggest that you seek legal advice regarding your possession of PHI. Although you are self insured, you are the employer, you are NOT the Plan.

Yes. An employer who self administers runs the risk of creating ill feelings with employees. There will be cases when a claim is denied and the employee will claim favoritism, bias or discrimination etc , alleging that someone else's claims should have been denied also or that someone else gets something that they should not have been given etc etc. The savings (probably none) should not be enough to offset the danger of ill feelings etc. There is also the risk of this discontent becoming a lawsuit or other legal issue. Using a TPA should remove this danger.

A VEBA is a funding method it is not the Plan. VEBAs are not subject to state insurance laws, the plans and arrangements that they fund are. VEBAs do not really become MEWAs, the plans that are provided and the method by which they are provided, under the VEBA become, MEWAs. As you stated "Policy holders are not not subject to state insurance regulation" BUT the employer is not the party protected by state insurance law it is the participating employees (Certificate holders) even in a Group plan wherein the Master Policy is issued to the employer but the Certificates are issued to the employeees. As you also stated "state insurance laws regulate parties acting as insurers in transacting an insurance business and their agents" which is exactly the point. In the posted case it is a self insured plan therefore it is provided by the employer with his "plan" acting as an insurer. If the plan is declared illegal etc or a MEWA etc then the insurer of the plan (the employer) would have been the unlicensed entity etc. Re: "the issue of MEWA regulation is not one of legality but what is the proper forum for regulation of the entity for providing benefits." the DOL was explicitly clear on this issue in their MEWA booklet including Appendix A and B.

You still have me confused. Union members signing the CBA???????? Are these the employer bargaining reps or the union bargaining reps, there is no one else other than these and Company officers who are involved with the CBA. What does it matter if any union employee has a side job or business whether sole prop., LLA, S or C Corp? How does a currently employed union member become an "alum"? The term "alum" implies a former employee not acurrent employee.

Your post starts off addressing owners, directors etc then it refers to "former bargaining unit alums ". Bargaining unit members are never usually, if ever, members of the first group that you referred to. Whose participation are you questioning?

mbozek As usual, I have to tell you.... Read the post again. I referenced a few recent and current cases in my post. It does not matter what our interpretation of ERISA or anything is if the courts determine otherwise. The courts have and are determining who is at fault and the penalties to be imposed in many cases where you might think they should not. But they are doing it any way and the states are prosecuting more and more of theses cases. Your reference to Curtis Wright and Delta etc is spurious and intellectually dishonest, since they did not involve plans that were "defective", disallowed or determined to be illegal or in violation of anything, as is being discussed as a possibility in this posted case. If any of those had been declared illegal etc then referencing them would have served a purpose, but once again you cite and reference erroneous or irrelevant items. Anyone involved in an insurance matter is subject to state insurance law ask your state Dept of Insurance Enforcement and Unlicensed Entitity prosecutors. You do not have to be a licensed entity to fall under their jurisdiction, much in the same way a person does not have to be a lawyer to be charged and found guilty of practicing law without a license, or a person does not have to be adoctor to be charged or convicted of practicing medicine without a license. To even make it simpler a person does not have to have been the murderer to be guilty of being an accessory, accomplice, aiding and abetting, obstructing justice etc etc. I expected a lawyer to know better.

If the VEBA turns out to regarded as a MEWA and subject to state insurance dept regulation, it most likely be treated as an unlicensed entity. Anyone promoting an unlicensed entity would be violating state law. Operators of unlicensed entities usually end facing fraud charges etc. All involved would most likely face charges of condoning, facilitating, conspiring, inducement in the committing of insurance fraud. You might want to look at the regulatory action that is taking place re American Benefits Plan, Employers Mutual, UEVEBA, TRG Marketing etc etc. In the posted case the whole arrangement would have been created and fosted by and through the employer. A lot also depends on whether or not the employer was profiting from the deal. To answer you directly.. It was the employer who set the VEBA up,.. It was the employer who selected the Trustees, ..Anyone who uses an illegal product is guilty, ... Punishment would be by both the State and DOL as in the cited cases. My basis for my comment is just the case law created by the regulators as they have prosecuted theses cases over the last 5 years. That is why the DOL found it necessary (at the request of a few states and the NAIC Task Force on Unlicensed Entities) to issue the MEWA booklet, and a large number of state Depts of Insurance have permanent postings on their websites warning agents, consumers and employers about unlicensed entities, MEWAs and bogus "ERISA exempt" health plans and arrangements. Look at a few.

You should read this DOL explanation of MEWAs and ERISA: http://www.dol.gov/ebsa/Publications/mewas.html

There is no such mention of VEBA in the ERISA cite, you gave, as far as I can see. Here is a link to what you cited: http://www4.law.cornell.edu/uscode/29/1144.html

Whenever you have a complicated or legal question, don't ask the broker, ask someone in authority at the insurance company (not the Customer Service or Account Rep. either). Now you do not know what the broker asked and you do not know who provided the answer. What happens if he did not explain properly? What happens if the person he asked was really not in a position to know the answer? Brokers are sales reps who know sales issues. Underwriting knows underwriting issues, Claims know certain claims issue. Company policy and legal interpretations of coverage, conditions and policy provisions etc are Legal Dept issues.

What are the grounds for denial? Is the denial from the employer, the plan or the insurer? Is the coverage guaranteed issue like almost all group plans? Did the employee have preious creditable coverage etc?

A note or complaint to the Insurance Dept against whom? What would the complaint be aboout? Subrogation/reimbursement wording of which coverage? Legally at fault is not an issue at this time, there is coverage under auto insurance and under health plan. The question is, Which one and Why?

Total costs for FAS 106 include ALL costs of the employer. Claims, admin fees and stop loss are costs of the employer and therefore under ALL costs.

If it runs afoul of state insurance laws and the DOL, everyone, promoter, selling agent, trustees, employer etc will be penalized. I suggest that you read the IRS Determination Letter. I bet that you will see that it makes no comment on anything but the structure of the VEBA and the tax exempt status of certain items only. I bet that it says nothing about what you can do with the VEBA, how it can or should be marketed, whether the actual items that you have in the VEBA allowed or not etc etc. The Determination Letter probably does not tell you anything except the general tax exempt status and definitely nothing about what you are trying to do with it. The IRS Determination Letter serves a purpose other that what you seem to think that it does and so it is not the status of the arrangement that is in question, it is what is being done with this VEBA that would disqualify it as a VEBA etc.

By every definition that I have seen, this is a MEWA. I also wonder if it is even a VEBA. Although my first impression is that it is not even a VEBA, I would need more info to be sure of what it really is. Why do you think that it qualifies as a VEBA?

I wish that you had posted this on the Health Plans Forum where you might have received more responses. Why does this even apply to your company? What says that you have to receive contributions etc electronically? This sort of enrollment/participation information between employer, plan sponsor and service providers seems to be exempted.