GBurns

mjb I am not following your reasoning, so please help by explaining further. We are now in 2006. The liability was incurred/accrued in 2004. That contribution was not made in either 2004 or 2005 and not yet in 2006. The deadline for 2005 has passed and so has 2006. You also agreed that "It cannot be deemed made in the year for which the liability accrued." Which would be 2004. You also stated "..the amount is deemed contributed in the yr the contribution is made to the plan." However, the OP stated that no contribution was or has been made as yet. So, how can the contribution be made and when and where deducted etc?

Moe, It is usually very difficult to eat your cake and still have it too. If "the plan's shortcomings were the fault of the insurance company and TPA", how can you then say that "TPAs are Ok" ? In your example cited, the only people who did not "really screw things up" seem to have been the insurance agents. I do not defend insurance agents, I am only confused by your post.

J2D2 and Mary C Sorry, bad post. There is really no difference. Mary C The date of injury is not relevant, only the date of service which would be the date the expense is incurred. After all you do not reimburse injuries under an FSA you reimburse expenses incurred. LRDG Where does it say that the expenses must be paid and must be paid within the same plan year? See Prop. Treas Regs 1.125-2 Q(6).

jmor99 Are you saying that date of service trumps date incurred?

I do not think that anyone is confused about deferral arrangements with or without bonuses with and without gross up for taxes etc. What you have outlined is quite normal but is irrelevant to the discussion. The OP and subsequent posts are discussing a bonus that is paid at the start of the year, a completely different scenario to your post where the bonus is at the end of or later in the year based on services (production) done during the year. In your scenario the services are rendered and the bonus earned before the deferral, whereas in the iscenario under discussion they are not. Your scenario involves payroll, whereas we are still not sure that payroll is even involved in the OP scenario.

I do not understand the note part of your response. It should not need a note since it should be part of the "accounting system" and be self explanatory. How is the bonus done, Payroll or some other wayl? What is the bonus paid as? Supplemental wages? If it has FWT and FICA withheld, How is the FWT rate determined? How is it reported at the end of the Quarter (941 etc) and at end of year (W2 or 1099)?

Jim Chad's post raises some questions. How is this "deposit early in the year" made? Is it made by the individual or is it made using a company check? Is it made through the payroll system or is it made through the company's A/P or otherwise? By the way, What is a "zero check bonus"?

The OP was on 8/16. The change is effective 1/01/06. 60 days from date of change occured back in March. However, you stated "prior to the change" which would be about November 1, 2005, last year. How do you still give timely notice of change? I know that many things are signed after the effective date as a result of admin or processing delays etc, but this seems more than a stretch. It is not a few days or even weeks, this involves many months.

It seems that they are also not contributions either. What is done in a case like this?

You do not seem too confident in your company. I would have expected that you would have given the name of the company or at the least offered a brochure, telephone number, website or some sort of contact information.

I was not aware that it was legal to do so with any plan or anything legal for that matter. Are you sure? There is IRS and case law that shows that you cannot retroactively adopt a health plan or a cafeteria plan or a salary reduction agreement or an elective deferral agreement s it seems unlikley that you could make an amendment retroactive to a retirement plan or otherwise. This would seem to leave a door open for all sorts of abuse and "buyers remorse" type things. I can just imagine an employer saying "Oh no, I did not mean to say that I was going to contribute to your promised pension plan, so forget that document that I gave you in January, here is the 1 that I should have given you that I signed yesterday, but see, it is dated 1/01/06 which is before the 1 that I gave you on the first working day 1/05/06."

The updates etc and in particular, the "Pinned Link" are in reference to those states that had not yet adopted the HSA. This is a tax issue and has nothing to do with insurance. This is similar to what happened with those states that did not adopt section 125 and I think there are probably still 1 or 2 states such as New Jersey, that still have not after over 20 years. That does not affect health insurance either. The adoption of the HSA tax deduction has nothing to do with the availability of HDHP. The qualifying HDHP has to meet the HSA requirement NOT that of the state insurance code. Most of those states already had HDHPs available and have had them since MSAs started years ago. There are NO state specifications that have to be met that pertain to HSA eligible HDHP, anyhow. Many insurance policies especially in the small group market are out-of-state plans. The approval is from the state of domicile. The filing with each state is usually informational not for approval. The Supremacy Clause is irrelevant in this issue. ERISA does not regulate insurance. ERISA preempts state law if the state law tries to regulate plans covered by ERISA. Insurance plans are not covered by ERISA so a conflict over insurance regulation does not occur. The conflict usually occurs when state law tries to regulate the employee benefit/welfare plan using insurance law. Health insurance is not an employee benefit plan or welfare plan. And regardless of Supremacy or any other clause, violating a federal law still has nothing to do with the pre-emption issue. Raising the issue of the Supremacy Clause evades addressing the claim that you made.

Who determines what is inappropriate? I thought that was determined by the ethics/morals/integrity etc of each poster and monitored by the Moderator. Advice could very easily be given without having to name any individual professional or by giving a direct referral. I think that it was just within the last 2 weeks that I saw multiple cases of posters giving themselves a plug by directly soliciting another poster. How come you made no comments then?

Whatever happened to the idea of using ads?

Don Where did you see "that not all of the states have plans that correspond to the HSA/HDHP federal law."? States do not have insurance plans, it is the insurance companies operating within a state who are the ones who do not have plans available for state approval, assuming that state approval is needed. In any case the fact that Federal law allows something does not mean that it must be available. That an employee may pre-tax health insurance premium under a section 125 cafeteria plan, does not mean that the employee has to and it does not mean that the employer must put a section 125 cafeteria plan in place either. Mortgage interest is allowed to be deductible But you must get an eligible mortgage first and you must use the proper method for the deduction, if not although you may you might not or cannot. As for your thought that violating a federal law causes pre-emption of state law... What can I say?

There seems to be some confusion between the "cafeteria plan" and the plan that is "self insured". What is being "self insured" and which plan's assets are held in this "Trust"?

Don I have no idea what your issue is. In any case I cannot think of any state that does not and has not always had plans available which have high deductibles. And that they had them even before MSAs which means long long before HSAs were even conceived. So I have no idea why you would think that any state would try to stop the availability of HDHPs if they did not already long have them and even if they could somehow stop insurers fron developing and offering them. The HSA legislation neither mandated nor suggested anything to do with insurance. The insurance issue was either already long available or would be made available in response to market demand. The legislation was directed at the consumer as an inducement to the consumer and as a replacement to the failed MSAs in response to intense lobbying by special interests. The HSA legislation was never an insurance issue, it always was a tax issue.

Since lawyers tend to limit their practice to a geographical area, it should be helpful if you told what state and city you and the employer are in. Also what benefits are you seeking?

Tell the difference between what? Obligation and suggestion? Insurance and tax deduction? What does the Federal Law regarding HSAs have to do with providing insurance? Why do you think that HSAs have to do with any state providing insurance to its citizens? The nearest thing that I see to a state providing insurance to its citizens is through Medicaid etc. Are you making a connection between HSAs and Medicaid or other state public health program?

As far as I know, in general you cannnot do something that is illegal or unlawful regardless of what your PD might say. That is like trying to use a contract to overide a law. I cannot deliberately set fire to your house even if you give me permission in writing. I suggest that you get legal counsel. I find it amusing that this TPA says that the funds are forfeited yet still says that state unclaimed property laws might apply. Forfeited to who? If forfeited to the Plan what is there left that would be unclaimed property? What happens if the reason for the unclaimed checks is that the wrong address was used by the TPA? What has now happened with the AP checks?

It seems that there might be some difference between the definitions of the term "sponsor".

This is just my opinion. 2005 is not relevant since the person was not a plan participant. 2006 claims are reimburseable. IMHO these are still claims related to expenses incurred in 2006 and services rendered in 2006. I do not think that it matters who is being paid as long as it is being paid for eligible medical expenses incurred during a covered period. When you pay a co-pay by credit card, it is not the Dr that you actually pay, it is the Credit card company who pays the Dr and then bills you via your statement and it is the Credit Card company to whom you actually cut a check in payment, isn't it? Try contacting Lisa Hand the Moderator and ask her for her help.

I would question the prudence of any fiduciary who allows a plan to operate with account values/balances that were not "rationalizable" and which do not reflect fair or reasonable market value (or close). If the fiduciary has to wait for a valuation in this circumstance before making any distribution, it seems that the account balances do not reflect fair value.

I also do not mean to denigrate your broker, but feel the need to reiterate the warnings. It is not what the broker says or explains, that is important. What is important is what you contractually agree on with the insurance company and the interpretations of BOTH you and that insurer. Make sure you BOTH interpret and understand the same things in the same way. Also get written explanations and illustrations of any formulas and calculations. Do not leave anthing to a future interpretation. In my 20 years as a broker etc I have seen very very few agents/brokers who understood Minimum Premium/ Retro Funding etc. There were a few back in the late 1980's who still remembered what was learned in the 1970's. I doubt that many of those are still around, so it is quite likely that your broker is new and still learning. BUT the bigger danger is that since the strategy has not been in much use for the last 20 years, the insurance company people might themselves be new and still trying to learn and understand. So it might be prudent to check the experience level of the insurer and company personnel also. Checking with users who have gone through a few reconciliations might also be good.

Nini What guidance have you found? Have you been able to get a copy of the 1997 IRS Info-Letter on the subject? If no, maybe our Moderator Lisa Hand might be kind enough to provide a copy if she still has it. Most likely you will have to go with the Info-Letter and common industry practice as can easily be found via a Google search. While it is true that just because nearly everyone does something, that does not necessarily make it right, that is the nature of the beast. If you think about it, the whole industry relies on "merely Proposed Treasury Regulations" which a number of Courts have declared to not "have any effect of law".