GBurns

Setting up a VEBA properly requires detailed knowledge and preferably some experience. Why not use an experienced professional?

Would you please share this info that you received? I have seen recent plans designed and in use in law firms (partnerships and LLPS) that utilize the changes to 104(a)(3) etc made by HIPAA Section 311 to accomplish this. I have also heard and read somewhere of an additional changes elsewhere under SBJPA that are useable. Some guidance appears in PLR 20007025.

Deferrals belong to the employee but so do all vested amounts regardless of original source. Would there not be a problem in restricting certain but not all employees from acessing vested amounts?

Mattj.. You say that you "have the opition to purchase" and did elect $200,000 over the $50,000 that is "company provided". If this is the case then there can be no imputed income, because you paid the premium. Imputed premium only arises when someone else (the employer) pays the premium for you. In any case what you outlined does provide a tax free death benefit provided the premium was not paid on a pre-tax basis for the amount over the $50,000.

The hospital is the sponsor of the plan it is not the plan. The services are provided by the provider network not by the plan and not by the hospital.

The employer can easily set up a section 105 medical reimbursement plan to handle the reimbursement of the premium to the employees. The reimbursement to the employees is NOT taxable income if the rules of Treas Regs 1.105-11 are followed along with the guidance set out in Rev Ruling 61-146. A section 125 would most likely be of no value but should be considered if there is a possibility of converting the policies to be employer provided coverage.

Let us say that for practical reasons the employer cannot recover from most and wants to get rid of the issue by picking up the amounts and the associated taxes for the employees and ex-employees. How is this reported? Where is the income and the taxes reported on 941 and W2 etc?

What is the difference to having 2 insurance plan choices, 1 with a high co-pay and deductible and a large network of providers (including multiple hospitals) and the second plan with low cpay and low deductible but a very small network of providers (and only 1 hospital)? Or any combination of the above. This is what almost every large employer provides whether deliberately or by default. If this is not a violation of rules etc why would the plan you are outlining be treated differently?

Maybe I am missing something. There is no change being made to the employee's election of coverage or status. The employee already elected family coverage, is already paying for it, the employee just wants to add a dependent not change the coverage. I do not see where this is even a section 125 issue, it seems to be an insurer issue.

If the employer pays the tax liability, how is that reported?

Thank you very much. What happens if it was not past 3/15/02?

A 401(k) fails testing and contributions (for whatever reason) long after the end of the calendar and plan year and also after W2s have been issued and all employees have already filed their tax returns. it is determined that monies have to be returned to the participants. How and when is this returned amount taxed? How, when and where is it reported? An additional factor is that the employer would like to pay for the employees ant taxes due. How can this be done?

Vebaguru... A VEBA could be set up to provide the desired benefits. The employee funds pay for the benefits that the VEBA is set up to provide. The VEBA is not set up for the purpose of the employee contribution/funds.

Why do the retirees only? Would you not be better off having both groups together thereby not only expanding the size of the group and spreading the risk, but also reducing the age/utilization factors?

As I see it you cannot set up a VEBA for the purpose of employees paying anything. The VEBA has to set up to provide a benefit. How the payment for the benefits is funded (employer paid, employee paid etc.) is an issue separate and apart from the purpose of the VEBA. This reminds me of the current problem that a number of state DOIs are trying to erase, that of agents and promoters selling people VEBAs for health insurance. As they point out the agent etc cannot sell a VEBA for insurance and in fact cannot sell a VBA anyhow (they cannot be sold) but the agent etc can sell health insurance and the client could have a VEBA set up that provides health insurance but the 2 do not go together in the way that it is promoted.

What is an "employee pay all VEBA" and why would anyone want one?

What is an "employee pay all VEBA" , why would anyone want one and where do you get one?

I think that you should explain more of the what and the why of what your employer is proposing. I also wonder why an employer has "membership" to which he is offering this plan? It is possible that the employer could be getting a lower premium for the health insurance but at the cost of higher out-of pocket costs to the employees. The employer might be considering setting up a 105 MERP to be able to pick up the additional expenses that an employee might incur over the old out-of pocket up to the new out of pocket. This would be perfectly normal and morally correct. The employees would still get the health insurance protion of the premium that the employer pays as not includable in their gross income as per section 106. The employees would be able to pay their portion on a pre-tax basis under section 125 thereby getting some tax relief.

Would not the taxes due on these wages offset the benefits from the plan? She would owe taxes, he would owe employer matching FICA and they would have increased AGI on their joint return.

Have you asked that insurance agent where this OHCI is and how to contact it, website or otherwise?

Lisa, I am very surprised by your post. This scenario of someone seeking directions or help is fairly frequent and I thought that 1 of the purposes of the Board was to help each other. Also there are a few individuals who incessantly end their posts with a statement urging people to contact them off the board by email or who have a lengthy signature with company name etc etc. Why would these not be in the category of advertising, marketing, promoting or soliciting which should be prohibited?

Based on other case law I would say that since it is not specifically excluded then it must be included. Logically if the drafter of the PD intented to exclude WC time they would have put it in just like they put in disability. If it is an omission then the rule is in favor of the employee, if it is ambiguous then again the ruling must be in favor of the employee. You might want amend the PD afterwards.

I suggest that you pay particular attention to the advice given by pjkoehler. The examiner is there for a particular year and is not allowed to go on fishing expeditions. Do not allow it. Do not give any info for any other year or item that is not specifically listed in their request for production or deficiency notices. If the examiner wants other years there is an established procedure and sequence of events that must occur so as to open those other years.

I do not see where this is a significant or even any change or reduction in coverage which is what it would need to be to be allowed under 1.125-4.

There is no need and there should be no claims & appeal process in a cafeteria plan document since such an issue cannot apply to a cafeteria plan. There is the inherent danger of misunderstanding and confusion in putting irrelevant items in a document. However, the underlying plans do need such claims and appeals process. Since the process should usually be different or have some difference for each of the underlying plans, they should each have their process separated. This separation also leaves room for change, addition or deletion of any product without affecting the others or the cafeteria plan.