GBurns

The choices seem limited. If paid in January 2008 durring run out periood for 2007 expenses and applied against 2007 FSA balance, then it could be 2007 taxable income which would mean adjusted W-2, W-3, 941 etc etc. However, it would be easier to treat it as 2008 taxable income which is what I expect that most would do. The logic for treating as 2008 taxable income is that the amount was paid (constructively received) in 2008 and since it was an ineligible expense it should not be applied to 2007 FSA balance. But that is just me. Let's hope that you do hear from some TPAs who have experienced the actual situation.

What does your client mean by "long term healthcare premiums" ? Health insurance premiums for the long term as in for a long time ? Or Long Term Care insurance (LTC or LTCI) premiums ? LTC (LTCI) is not healthcare. It could be that your client was mis-told by his friends. It is always diificult to get an answer if the info was bad to begin with.

Notice that in everything that you have referenced, the reimbursment is to the employee. You will find nothing that says "to the domestic partner' and I do not recall anything that says "to the dependent" either. Rembursement is to the participating employee and/or accepted assigns (which are usually service providers). From memory, reimbursement is for the eligible expenses of the employee incurred for the medical care of the employee, spouse and eligible dependents. I do not recall the IRS definition of an eligible dependent including domestic partners, but see section 152.

QDRO Can you explain what you mean ? The employee is not getting any cash-out or any other benefit.

While I usually work with large groups, I have had a few small ones. But it could depend on your legal stnding, purpose and your explanation of need and applicable law. We get the info by having the employer/plan sponsor send a letter instructing that the info be provided to us for health plan purposes. The letter is sent certified RRR to the CEO. Anyone else seems to cause chaos. We have had to sometimes persist and insist, but have always got the info. In 1 case each in Indiana, RI, NJ and Mryland we had to have the state DOI make a call threatening action if the info was not provided. We did not have to make formal ccomplaints, just a simple phone call and then faxed the correspondence. In most states the issue falls under Unfair Business Practices. There are some areas in the country where the data is just not very readily availabel because of how that regions Small group health rates are determined but even then a computer can sort out any individual by name or identifier. In the case of Indiana state law requires that data be kept on groups 2+lives. I receive data from Great-West, Aetna, UHC, various BCBS, and a few small regional TPAs. I have had groups with 20+, 30, 60 and 80 in Indiana, Ohio, NJ, Mass and Maryland. I thing that I have successfully had close to 40 such requests made in the last few years. I did do some work in 2002 to clean up an issue for some ex-clients of a PEO. All were under 100 lives and I think more than 10 were in the Philadelphia area and the others nearby in NJ. It was a self-funded plan through BCBS. I do not recall having any problems.

Sieve It seems that our differing viewpoints are caused by different interpretations of the meaning of "loss". To me, a Form 5500 and in particular items like 4f reflect end of period results. A snapshot of an account balance or item value at a certain time. Fluctuations during the reporting period are not reported just the ending balance on the particular day.

My answers t o your questions: Should participants in Plan be worried? No, but concerned Yes. They should find out and evaluate the investments held. Could Big Time Insurer's bankruptcy have any effect on Plan participants' accounts? It depends on what the investments are. See post by Kevin C. Should Plan Fiduciaries think about changing providers? That depends on the facts discovered.

If you are pre-taxing the employee's contribution, it should be done under a section 125 cafeteria plan. It makes no difference whether for individual policies or a group policy, the rules of section 125 apply.

While this is fun, it seems that we have gone off-track. Isn't the problem the definition of compensation that should be used ? Can the commissions be disregarded?

Software to automate what aspect ? Why and for use by what sort of business ? Obviously you are not a TPA and a sales rep would be representing someone who was already equipped. Maybe we do not understand your definition of defined contribution health plan.

What does Big Insurer"s bankruptcy have to do with the continued viability and operation of the subsidiary ? The bankruptcy of a parent does not necessarily affect the subsidiary. Enron sold PGE and CCE while in bankruptcy. Last I looked both were still doing fine.

A good hypo, but in this case we do not know the years involved. It could very well be all in 2008. But, getting back to your hypo, What happens if the "Owner" forgives the act or accepts restitution? Is there a reportable loss ? NO. Your point about "Yes" for 4f is agreed with except that again if the embezzlement and the reimbursement take place in the same reporting period, it would be a wash and there would be no loss. Eventual reimbursement is a different issue. The possibility of a false police report and the consequences goes exactly to my point that naveen needs answers to other questions before seeking answers to the posted questions. As K2retire posted, "We don't have enough information to answer your questions.".

To me, learning about or hearing about a possible embezzlement does not mean that fraud or any dishonest act has taken place. Something more definite is needed whether it be civil action or criminal action. It should not be determined on someone's say so especially since that someone (the Owner) had a more than casual relationship with the alleged perpetrator. Then there is the issue of "getting back". If the plan is made whole during the samereporting year, What is the amount of the loss ? In an audit the documents supporting the entries are what are examined, not the Form. Those supporting documents would have to state how the loss was suffered, hence the disclosure of the embezzler's name, when and how.

It is somewhat pointless to have answers to questions which might not be relevant or even applicable. You have yet to determine what, if anything is even reportable. Then, if anything is, you ask the How and When. As it is now you have nothing that is yet reportable. There is no crime as yet, only an allegation. Even if there was a crime, if there is a "made good" in any of many forms, Is there anything to report to anyone ? It serves neither you nor your client to have answers for situations that do not exist or might never exist. In any case your questions raise more questions that need to be answered first. But no one can stop you from jumping ahead of the situation and run the risk of creating a collossal mess for your client. I hope that others chime in so that you get other perspectives.

naveen Reporting to the police is not the same as being charged with. Being charged with a crime is an allegation not a conviction. There is no embezzlement until there is a conviction. You do not know that there will be a conviction. I do not think that it can be reported or claimed until adjudicated. Think about it, What proof do you have, right now, that would be accepted in a lawsuit ? An audit would be no different. You need substantiation not allegation. Also, you earlier posted the possiblity of the plan sponsor "making good" the loss. There would be no loss to the plan if the plan is made good, reimbursed or restitution is made. How would you then report ? As Kevin C pointed out, reporting will most likely cause an audit. The alleged embezzler and the Owner would quite likely also get audited. You would have falsely claimed a loss which in fact since it was "made good" would not have been a loss. The 5500 is signed under penalty for perjury. How do you plan to handle that ? If your claim is disallowed or there is no conviction, but your reporting causes the alleged embezzler to be audited, Don't you think that he/she has good grounds for a defamation etc lawsuit with you as a party ?

But, Do we really know if this is a PT, an item subject to excise tax or even to be corrected/paid ? Do we even know what is reportable? All we have is an allegation of fraud. How perpetrated, by whom and with what involvement of the owner, we have no idea. What happens if it turns out that there was no fraud, just that naveen does not understand or know all the details and is just going by a cursory "it looks like" ?

Isn't this the employee's "regular" compensation and doesn't this amount get reported on a W-2 ? Isn't the commission subjected to FICA ? If so how can this compensation be disregarded ? I admit that this is not my area, but the issue sticks out especially from a discrimination perspective. But even if that does not matter, there is still the issue of the definiton of compensation for purposes of ADP/ACP testing.

Maybe it is just me, but I wonder why Naveen is not willing to give any information or answer any of the questions asked. The interest seems to focused solely on CYA type regulatory reporting from a peculiar point of view. Could it be that there is a special relationship between the owner and this employee who allegedly committed fraud ? I say allegedly because there appears to be some reluctance to involve the authorities etc.

Somehow, I cannot see what the problem is. In the School Districts that I know, the employee's salary "year" or contract year is the same as the SD's fiscal year. So whether 10 month or 12 month the entire salary gets paid during the fiscal year in all cases. Then there are the options of "the later of..." and "or" in the Regs.

I have no ideaa what you could mean by "limited self-fund". There are small employers who are interested in self-funding even for a few years. There are small employers who wuld just do it for the possible first year savings, then revert if need be. However, to put together an offering and marketing material requires some knowledge of the subject and its many issues. I suggested that you do some research first but you seem to have decided against that. I find it hard to believe that you d not detailed claims experience, but that could be because you do not know how to get it, which is one of the things that good TPAs are able to and do so as an early step usually as part of the feasibility, but you by-passed this. I made some off the board suggestions of people to call and you said that you called afew What did Great-West say ? GW might very well be the largest TPA in the size that you are looking for and also makes available a lot of guidance material. Plus there is always Google.

It makes a difference if the contract says so. It makes no difference whether individual, group or otherwise, it is as the contract says that it is. That contract was approved by the state and that is what the insurer has to use. Some slight variation is allowed in the very large group market, but stll there is eventual state law compliance and regulation. But in any case whatever is agreed to in the application becomes the contract terms and conditions. If the contract specifies who is Payor, then that is it. As to your question to John, Yes a state can have its own definiftion. Texas does and that is yours state isn't it ? Just like MA etc have their own definitions in the marriage area and NJ does not recognize section 125 as being tax relief, a state is free to have its own definition that is different from federal. States have their own privacy laws and minimum wage laws don't they ? So why not group health plan ?.

Matthew No need to get uppity. It is a valid question and one that should have been one of the first responses. In a normal situation someone with your issue would usually look for the TPA first. That you put the cart before the horse does not make the question questionable. IMHO, it is you who should be more specific.

Don I have tried, but I cannot understand your questions. Insurance issues are regulated by each state. Insurance contracts like rates and all policy forms have to conform with state law and be approved by the state. This includes the terms and conditions etc even the size of the type used for printing. The application which is a policy form which is then incorporated into the policy, which is also a policy form. The terms and conditions include method of premium payment and payor. Therefore state insurance law governs how insurance companies get paid. The primary responsibility of state insurance regulators is to enforce the state insurance laws. Insurance contracts are subject to state laws. What are you implying ? That insurance contracts are not ?

A death benefit plan is not a life insurance policy, however the death benefit might be provided (or funded) through a life insurance policy. Similar for a medical expense arrangement, which can be self-funded or fully insured. The plan is not the policy.

QDRO I have seen arguments that it could be either an Exempt Benefit or a Payroll Practice. Your illustration is exactly what used to be done in what used to be called "the Payroll Deduction market" (now known as Worksite Marketing) until the issue of taxability of the benefits of some types of supplemental policies became an issue. I think (but have not verified) that companies like Aflac take the safe route of stating in their material HIPAA compliant statements but try to leave the issue to the employer/Plan Sponsor. Whenever I have referred to things like cafeteria plans as "tax tricks" I get no end of flak.