GBurns

This should clarify the issue. http://www.irs.gov/irb/2007-10_IRB/ar10.html

I would first verify that there was an eligible change of status and the nature. I think that this is needed in order to determine what change is allowed under the "Consistency Rule".

I have not heard of it, but, just to make sure that you understand your client (and can correct them, if necessary) I suggest that you ask them to state where they saw that the 2006 requirement was done away with. Get on the same page and trend of thought. I recently had someone who claimed that the change of status requirements for election changes 1.125-4 had been done away with because they did not see them in the 2007 Prop. Regs. Since they pointed out where it was not, I was able to go directly to new 1.125-2 (a)(4) and the preamble to show them that 1.125-4 was still in effect and to explain that the 2007 Prop. Regs does not affect the older Final Regs.

I urge that you seek competent legal advice to make sure that you are compliant with HIPAA and any applicable state laws. Most likely your self insured medical reimbursement plan will be treated as being a group health plan. As a result the HIPAA non-discrimination rules will apply, especially since you are denying coverage totally. A simple rewards type peogram with stated goals might serve you better. This might help clarify the issue. Note the 2nd and 3rd Questions: http://www.dol.gov/ebsa/faqs/faq_hipaa_ND.html

While not saying that www.changeofstatus.com is authoritative, their decision tool includes (and has long done so) the scenario of change of status of a dependent caused by that dependent's employment status. Their Q&A was developed partially from examples given in the Prop. Regs etc and various rulings and comments by the IRS. I am not aware of their credibility or accuracy being contested over the years so I have to say that the Prop. Regs do address the issue. Neither a spouse nor a dependent can participate in a section 125 plan, but they may derive benefits from a participant. A participant in a section 125 plan must be a person treated as an employee under the Regs. I think that it follows that only participants can "enroll" beneficiaries for benefits under the plan and unless "enrolled" in the section 125 plan they cannot be "enrolled" in the Group Health Plan or other benefits provided through the section 125 plan. So a dependent cannot "enroll" themself.

I do not really want to give more publicity to these schemes, but the fact that they have been presented to enough people to cause postings to be made here on the Board, means that there is probably a significant size group of affected employers and their employees. Has anyone heard of or received any more info? Chaz, What was the outcome with Benemax? Was it similar?

It is just the way that the news items have come out. The color of your glasses probably determined your reaction.

Why not just ask the dentist whose link you posted at the end of your post?

Is this what the OP CassandraS meant ?

Personally, I would question what the client is saying. This client claims that "he amended his plan". How ? I cannot recall seeing clients amending plans themselves, usually it involves the plan provider, which in this case it seems not. This client instructs the CPA to amend the records and create a deferral. What did the CPA do and tell him? This client "checked" with Principal, but Do you know the exact nature of the conversation and with whom it took place? Too often I used to see people who claimed to have been told things then it turns out that it really wasn't so at all. I see too many questionable things to feel comfortable believing this client.

I am not sure that we are clear as to what you really are doing. Is the coverage as of date of hire ( as Matthew222 is addressing) or are you really giving retroactive coverage ? Would a March 15 hire date mean that I had and knew that I was covered or is it that on April 9th, you tell me that I was covered all along from March 15th? When would I have enrolled? What is the date on the application? Did your insurance carrier agree to this retroactive coverage?

What are "international students" ?

Are you cetain that he gets BOTH the W2 and the 1099 from the SAME company?

Iit is most likely that the "loan documentation" that you are referring to are the loan application papers and not the loan closing documents. Two different things. Very often 1 spouse is not on the application or even initial loan package papers, but is added at loan closing as a requirement of the closing documents. The loan closing documents should not be yet available for you to be seeing.

Do you really mean "plan" or did you mean "insurance policy"?

Benny Guy Did you look at page 4 where it addresses a colonoscopy screening where polyps are found and removed? Edit: A polypectomy always caused a change in the billing codes. The only change caused by PPACCA is the prohibition against charging co-pays and coinsurance in non-grandfathered plans.

I guess a lot depends on whether the plan is grandfathered or not, but the attached should give you some insight into what others are doing: https://www.unitedhealthcareonline.com/ccmc...Services_CD.pdf

It looks like a different concept especially since Benemax does not pre-tax the employee contribution (it seems to use employer only funding) and only reimburses actual claims made. However since not all the details are disclosed, I guess we will have to wait and see what they provide.

It seems that we are not understanding your concern. What does a BAA have to do with this? What does the employer have to do with this?

Why would an employer/plan sponsor need it? The relationship between a group health plan and the insurance provided is not required because it is an organized health care arrangement (OHCA).

Scott One of the purposes of the Benefitslink Message Boards, is to discuss issues, such as this, in public so that there can be input from various sources. Sometimes that input provides another perspective, sometimes additional inforrmation and sometimes it just exposes the truth. Discussing this issue with you would keep valuable information from the public. Regarding your claim that " We actually encourage our prospective clients to get legal advice", I have to ask you a few obvious questions: Have any of them sought legal advice? What was the legal advice that was given? Regarding Bene$mart: It is expected that you would have done some due diligence investigation into BOTH the promoters AND the plans, especially since you are a licensed insurance agent, and probably might also hold other licenses. Did you really do any due diligence or did you just take your boss's word ? Have you even read the "technical" support material and checked to see if it was accurate and relevant? Did you call the TEGE EB Division of the IRS to get even a cursory opinion? Did you, or anyone that you know, get a legal opinion from an independent source regarding compliance with tax law etc? If you encourage prospective clients, I would expect that you would do the same first. Have you evaluated the merits and proven the accuracy of "recalculating" the payroll? Have you verfied with both the life insurance carrier and your state dept of insurance that life insurance can be written legally in this manner? There are many many questions that need answers.

Isn't it 50-50 ? After all, on Februrary 29, 2012 he either dies or lives.

According to the OP the sellers employees are now the buyer's employees.

If you look at the filings in the before mentioned Dept of Justice lawsuit, you will see mention of some of the employers who used that plan. Those were mainly the larger ones. You will notice that, as a rule, they did not get a legal opinion nor sought legal advice regarding the legal merits or tax law compliance etc. They instead seemingly relied solely on the representations made by the salesman, who in turn relied on the promoter. These plans were successfully sold because the targets were small businesses who had neither in house counsel nor traditionally used outside legal advice. A small employer with 20 covered employees with potential savings of probably $30,000 per year probably would not readily spend $5,000 just to find out if the proposed plan was compliant etc, much less spend more for a formal opinion etc. Most small employers would not even have the initiative or the knowledge, to even call the Branch of the IRS that handles Employee Benefits and ask a few questions. So they prey on the small and uninformed, who erroneously trusts the agent. I bet that they do not have any clients who sought legal advice from a competent independent lawyer. I wonder how quickly they would drop a prospective client, who insisted on getting legal advice and also calling the IRS.

I just came across the Willis Compliance Manual and decided to browse through. To my great surprise they had a section, Chapter 3 pages 17 and 18 addressing the old MR106 Plan. This scheme was marketed way back in 1998-2000 and subsequent variations on the theme, was the main reason for Rev Rulings 2002-3 and 2002-80. This manual is dated February 2011 so I guess that the issue must still be alive other than with the Bene$mart version. https://welcome2.willis.com/compliance/Will...%20Benefits.pdf