GBurns

HCFA Program Memorandum 00-04 relates to actively-at- work requirements. HCFA Program Memorandum 00-01 relates to non-confinement requirements. Also www.ebia.com/weekly/articles/HIPAA001005HCFAMemo.html And, of course, do a search on Benefits Buzz and the Benefitslinks Boards.

You say that "Arguably,we don't have a MEWA" then you say that you all use the same Plan Document. If you all use the same PD, you have a MEWA. If the MEWA files 1 Form 5500 you have a MEWA. I think that you should decide whether or not you have a MEWA. I suspect that the response that you got from the DOI was based on how you phrased your statements and not on the facts. In this post you have swung back and forth. Why would premiums go to the broker and not the insurer or service providers?

How do you run a MEWA without a Trust in the first place. Who negotiates the insurance contracts, who selects the service providers etc?

Well said. This is the best explanation I have seen.

Try a search on Benefits Buzz. There have been a few articles on the subject. USA Today 12/1/2001 listed The University of Iowa, Visteon, U.S. News & World Report (the company), and Radiant Systems as companies making cuts. Kiplinger also had an article in November.

I have just got to ask the readers of this Board to help me on this one. Is it normal for the TPA to: 1. Hold the money in their own account? 2. To be the custodian of the assets? 3. To be the "legal owner" as intimated here? In my limited experience the TPA is the recordkeeper, the Trustee is the custodian, the investment holds the assets and the "legal owner" is the plan participant. What is normal or most prevalent?????

I do not understand your post. You state that the employee is eligible to enroll on the first day of the month following sixty days of employment the employee must have actually begun work. Then you say that the employee must actually have begun work for the coverage to be effective. How could the employee finish the sixty days if they never started working? If you meant that they must turn up for work on that first day, then you still have the actively at work requirement that is not allowed by HIPAA.

It is not the duty of the IRS to address PEO arrangements, it is the duty of PEOs and others to adhere to the IRC. The rules for 401(k) etc are well established and those wishing to esfablish a plan must set it up according to the rules not the other way around. There have been numerous cases and rulings that address the issue of benefits whether it be 401(k), 125 plans or health benefits. These are easily found by anyone who spends a few minutes looking, even if only to the few that I suggested earlier. Here is another: http://www.ebia.com/weekly/articles/Caf000...4Successor.html There is no need for the IRS to "struggle behind the scenes", the issue is clear cut and easy to follow. By the way, in most cases if you set up a multiple employer arrangement it most likely will constitute a MEWA which would create even larger problems in most states. Many states do not allow MEWAs.

There is no lack of guidance from the IRS. The issue is clear and has been addresssed in many courts. If you need a very simple example of the fact that a "co-employer" does not exist for purposes of the IRC, just have a PEO fill out a Form 940 and try to take the SUTA discount claiming to be either the "co-employer" or the "employer". You might also want to ask the reps from supplemental benefits and 125 providers like AFLAC or American Fidelity why they have been converting their plans from the PEOs to the clients.

I would think that the employee would be responsible even though the Administrator reimbursed an ineligible item. You did not say who "accepted" the payment.

You most likely will have to set up a separate Self-Insured Medical Expense Reimbursement Plan. The fact that you even posted the question suggests that you might not currently have an FSA and so do not have a Claims Administrator. Setting up the new plan will require a Claims Administrator although it is very possible to self administer the plan with appropriate software. If you set up the MERP the amounts reimbursed to the employees will be tax free. If you W2 the employees it will be included in their gross income and could be taxable etc. In fact, it might even be subject to FICA etc as payroll amounts.

I suggest that you find a couple of salesmen and let them compete for your potential business. Let them all come up with their various suggestions as to what to do with the money. I also suggest that you find out, right now, how much control you will have over the money if you leave it where it is until you have gathered as many ideas as you can. If you do not have to make the decision now and can make it later, then take your time and do not rush to a decision. Most plans allow you to do your transfer etc any time even after you leave the job. When you leave the job the only things that you cannot do is to put in more money or take out loans. You are usually able to do everything else even if you are not in the US. If you are not in the US and need to sign documents that need to be notarized, there are notaries in Taiwan (and other countries) and at all Embassies and Consular Offices. Just do not think that you have to make your decision now.

A properly chargeable expense is always proper even if paid in a delinquent manner. This is no different from a Bad Debt recovery. What I do not understand is your eventual reference to an allocation per participant. You originally referred to plan expenses now you refer to participants. 2 separate issues. Does the PD allow the plan to pay the expenses or advance the payment of expenses for plan participants? As QRDOPhile asked ..Did the employer properly document his payments as loans to the plan or were they recorded as gifts?

I suggest that you do some research to see if anyone (other than the PEO's internal staff) can really participate in any benefit plan offered by a PEO, in the first place.

There is quite a lot of useful info in the Q&A section of Benefitslink, in particular the "Who's the Employer" "Advanded Plan Design" and the "401(k)" columns. You might also want to look at info at www.cfcw.org What you will find is that there a many reasons given why the client cannot and should not use the 401(k) provided by most PEOs. There should also be reasons why there should be no form that the client can sign with the PEO that has any relevance to a 401(k) regardless of what the PEO might think or say. In general, the IRC does not recognize any such thing as a "co-employer".

If an employee terminates with a balance left in the FSA and under COBRA you allow them to submit claims and get reimbursements from the balance in the FSA, that is one thing. But, why would the employee want to make any contribution on an after tax basis? There is no benefit of pre-tax treatment and any amounts contributed are subject to the risk of forfeiture if not used. The employee could just as well use up the balance then pay out of pocket and not have the risk of forfeiture.

What legitimate business would the employer claim to be doing? What would be the source of revenue? What duities would the "employee" be providing that would substantiate an ordinary and necessary business expense such as the salary?

The whole idea of an FSA is to allow an employee to get a tax deduction by being able to pre-tax money to be set aside for the expenses of medical care. If the employee is terminated and therefore no longer on the payroll, how can you deduct on a pre-tax basis the contribution to the FSA?

I do not think that it is even allowed for Davis Bacon (or other Prevailing Wage jobs) employees to be in the same plan as non-DB employees. I suggest that you check with a TPA who is experienced in DBRA and other Prevailing Wage plan administration. It is a very technical area and there are very few TPAs capable of administering them.

Aside from the ERISA and HIPAA issues, there are some states that prohibit the List Billing of individual policies. I have never seen it applied, but it is there. If you consider that the Cancer and A&H or STD policies sold by Unum/Colonial, AFLAC, American Heritage/Allstate, Great American etc are usually sold through Cafeteria Plans and are all individual accident & health plans under IRC 105 just like medical insurance and there have been no problems over the last 15 years that I have ever heard of. The problem then seems to be the requirements of your health insurer. I suggest that you check with them. Please note checking with your agent is not checking with the insurer. Also check your DOI.

To make the assumption, or any assumption, in a matter like this is dangerous. Instead of assuming that Lincoln is exiting for economic reasons, you should ask them instead. I was not aware that Lincoln was located in your District so why would they have been audited there? Also Lincoln is not the using taxpayer so why would an audit of Lincoln be relevant? The fact that you have been using the plan for 15 years is not a relevant issue. Many other insurance products have been in use for long periods before being attacked by the IRS. COLI, Split dollar and Reverse Split Dollar come to mind very easily.

There is absolutely no mention of either group or individual plans in either 106 or 1.125-2 Q&A 7. Treas Regs 1.105-1(a)(d)(1) addresses "Individual policies" and 1.105-1(a)(d)(2) addresses "Group policies". There is nothing that I have ever seen in either the IRC or Treas Regs that say that any employer provided accident and health coverage has to be through a group policy.

Guarantee Trust sells their Exec-U-Care in many states and a Wellpoint subsidiary whose name I cannot remember (it was something like EPIC Ins. Co) sells their Exec-U-Med on the West Coast. Are you comfortable with this type of plan? Why?

Have you found anything that might be of interest?

I would not trust any employer to be the determiner of whether or not the plan falls under ERISA. The only authority is the DOL. Get your SPD and other info together and call them. Even if they decide that they have no jurisdiction, call the state DOI and if the product is SEC registered get the agents name etc and call the NASD and SEC.