GBurns

ERISAnut It seems that you might be arguing with yourself. I also notice that regarding issue # 2 you keep going over the same ground but never offering a solution or an opinion. We know that issue #2 is a separate issue. So what do you advise or opine? I hope that you do realize that no one has to address both or all or any of the issues when they post to the thread. They are free to address what they please and opine as they please, subject only to the Moderator. I think that is called freedom of expression. If they want to expand on a post by offering what they see as a correction, filling in the blanks, or answering the unasked, that is their right, isn't it? Why worry about someone else's post that you do not agree with or sometimes might not understand? Unless it is a personal type attack, let it slide. Anyhow, welcome to the Board. I do not know how long you might have been lurking before posting, but you might want to consider toning down your enthusiasm for posting. It seems, and this is just my opinion, that new posters are not as adept at posting and at Board etiquette initially. It takes some time and practice to develop your posting style especially since writing short opinion blurbs/responses on such short notice is not something that most people do or have done before. Now you others, be nice, please.

I am referring to payroll deductions (section 125 salary reductions) that are done for the purpose of paying the employee share of the health coverage cost. Payroll deductions are deducted as Payables (FICA Payable, Union Dues Payable, Health Insurance Payable etc) for remittance to the selected entity. Payroll deductions are made on behalf of the employee payable to the entity named by the employee. Deductions are not made for employers, unless it is for money owed to that employer, a very rare situation. Enrollment information is held by the employer and the eligibility information provided by the enrolling employee would be in that enrollment information, but that is as far as it goes for the employer. Accepting the enrollment information is done by the Plan and the Plan Administrator not the employer (as employer). Interpreting plan provisions (whether for coverage or for claims) is not an employer (as employer) function. Individually identifiable claims information etc is PHI. The rest of "Information cannot be PHI if it is not received by the plan. The nature of the information is immaterial if it is held by the employer." I do not understand. This issue arose only because information other than what is on the enrollment form was relayed to the employer as an employer. This information was derived from claims made. Detailed or individually identifiable claims and health info is PHI.

To become covered under the medical plan the employee must first enroll. To enroll they must fill out the required forms. Among these forms should be the 125 election and SRA. That way the enrollment and the 125 election are done at the same time or not at all. The medical plan will not cover retroactively and the 125 election cannot be retroactive.

Much more info is needed. If there are no employer contributions and the contracts are owned and funded by the employee, Why does it matter if the employer changes vendors? In fact, Why would the employer want to change vendors rather than just add additional vendors? Why not freeze these vendors and start new accounts with the new vendors? If the plan currently has no employer contributions etc, How is the employer going to account for the reimbursement? The employer cannot just start putting in money if the plan was not set up to allow employer contributions.

Although I do think that it is only proper to fill in any "blanks" that we might see in any post or request for an opinion. ASAP/15 arguably not being the issue and being understood, we still have issue #2, the funding of the investment as per the employee's request (investment timing). I think it would be hard to explain why the funds can be transferred to a money market fund but not to the employee's chosen investment. It should be even harder to explain why it takes a whole Quarter to then send that money to the chosen Fund. As implied by WDIK, there should be serious fiduciary liability issues. Additionally, from what I recall, the employer's agreement should have wording to the effect that the contributions will be remitted to the chosen fund in a timely manner if not in a specified time. What wording is there on the Salary Reduction agreement, Adoption Agreement and the Services Agreement etc? So, IMHO, even if there is no specific regulatory guidance, there should be some contractual provision that should address this anyhow. I cannot imagine the remittance of an employee deferral being left up to the whim and fancy of an employer or plan.

leevena The employer is not the plan. The employer provides a payroll accomodation to the plan by making the payroll deductions. Payroll deductions are not made for the employer's purposes but for the health plan's purposes. I doubt that the employer provides any administrative duties for the plan. Administrative duties are usually performed by outside vendors such as a Claims Adminstrator. The Claims Administrator also usually handles eligibility and coverage issues. Since it is the CA handling eligibility and coverage issues it should be the CA who denies coverage and payment of claims. What the employer needs to know is how much to deduct each pay period. Knowing the why beyond what is on an enrollment form is not an employer function, it is a plan operation function subject to being PHI. I doubt that the employer as employer can make any plan operation decisions even if the plan is self-administered, which is very doubtful. The Plan Sponsor can. Notice the HIPAA requirement for a privacy officer etc if there is employer involvement beyond basic enrollment etc. To me this more than points out that there is a big difference between employer and plan sponsor. I even think that this employee might be able to raise privacy issues because of how the issue was discovered. Was this other reporting employee eligible to be privy to PHI if it was discovered from seeing PHI? As crs points out the employer might be concerned about having a dishonest employee. But that is not a health plan issue and I would advise against making employment decisions based on health plan issues without seeking legal counsel.

Why would the GHP need to inform the employer anyhow? What action could the employer takes as employer or as plan sponsor? If the GHP denies coverage and properly notifies the employee that should be the end of that. Unless the employee subsequently knowingly tries to submit claims there should be no further problem that I can see. And if the employee does so then I would think that fraud or other action could be threatened.

Are they cancelling the health plan or are they cancelling the health insurance coverage?

Most things in life have various aspects and are not single faceted. I think that we all know that. The reason for using a link is not for referral purposes but so that anyone who wishes can use the link to get to read what was actually reported rather than rely on a poster's interpretation. It certainly seemed to be more sensible to give the link so that each person can draw their own conclusions, than to either post the entire article or to summarize it which would, of course, reduce it to being my own opinion. I do not think that anyone's interpretation or opinion is better than the article itself, regardless of what you think of your own opinions. What is reported in the article is self explanatory. Now at least 1 of the items involved has been declared by a court of competent jurisdiction to have been properly disallowed under applicable tax law based on its nature and substance etc. and not on its operational aspects only. In other words the government can now argue that tax law was violated as they originally intended. That is why I said that they should have waited. This has nothing to do with the opinion letters, per se, but certainly has to do with the avenues open to the prosecutors regarding illegal activity. As Professor Bankman points out, this ruling "seems to take away one of the defense's arguments". Is this enough of an explanation of what I am talking about? Or do you need something simpler?

Maybe they should all have waited a few more days. The New York Times reported on Saturday in the Business section that "U.S. Judge Backs I.R.S Ruling Invalidating Tax Shelter, Possibly Aiding U.S. Criminal Case". http://www.nytimes.com/2006/04/22/business/22shelter.html

Why? What would be the purpose? I would think that this owner should be the sole remaining participant. If that is correct, Wouldn't he/she be better off rolling the money to an IRA?

You should be able to access such wording from some of the large providers who have sample documents on their websites. I would try Fidelity, ADP, TIAA etc.

The requirement for the Board Resolution etc is not determined by the using company but by the providing company. It does not matter whether or not the corporate by laws require it, it matters if the provider requires it. In any event , if "Most boards do not want to be bothered with discussing welfare plans and delegate adoption to corporation's officers.", this is delegated by means of a Board Resolution is it not? In that event a copy of that "delegation" of authority, a Board Resolution, is used, so there is a Board Resolution for the adoption anyhow. I thought that Board action, hence resolution, adoption etc, was required for all major actions especially those that are not part of the day to day operation of the company. A new Cafeteria Plan does not seem like day to day operation activity. All the insurance companies that I have seen also require a signed Board Resolution etc for new health coverage. This requires no lawyers so lawyer fees are not an issue. All the banks that I have seen require a Board Resolution for the opening of a bank checking account. It matters not what the by-laws state, it matters what the bank requires for the opening of an account. No lawyer needs to attend any meeting so again the lawyer fee is not an issue.

I saw that, but still seasonal employees sometimes have the same needs as regular employees. They still have out of pocket expenses that will not be enough to exceed the 7.5% for itemization, assuming that itemization is even an option for any of them. The problem will be employee communications and understanding especially about the "use it or lose it". I would suggest using an employer funded MERP of some sort, with low caps. Since funding resources is a problem with many who employ these seasonal workers who are quite often migrant workers, I would suggest an employer pool or public subsidy as the funding source rather than employee salary reductions. You should seek help from some creative thinkers.

I honestly do not see what problem you have. Compensation is as defined by your 401(k) Plan Document, W-2 figures are as defined by the IRS and as calculated by the W-2 preparer. You cannot change any of those 2 items, they are as they are. Box 1 on your W-2 is not for salary, it is for all wages, tips, other compensation and includes any amount paid by the S Corporation for health insurance for 2% or more shareholders of the S Corp. Box 3 is for wages, tips, other compensation subject to social security tax. The computation of what is entered in Box 1 should have been done by the W-2 preparer in order to prepare the W-2. Health Insurance premiums paid is not something that is or can be added on by anyone after the fact. See page 9 of the W-2 instructions.

I also agree. As long as the eligible expense in incurred while covered it cannot be treated differently and must be reimbursed to the full $2400 regardless of how much was contributed by the employee.

Seasonal employees are still people and they render valuable services. What problem do you forsee that causes you to ask ? The only problem that I see would be if they participated in an FSA, otherwise I cannot think of a problem. If they have to pay an employee share for health insurance through a SRA, I would think that when they terminate employment the election also terminates along with the health insurance coverage. There only remains a problem with COBRA. However, that might not be a problem if they either do not elect COBRA because of cost or they move out of the serviceable area. Nothing else comes to mind at first glance.

Note that the actuary said "virtually no", which means that there are a few insurance companies which might be able to solve your problem. See if he/she is willing to name a few and hope that those are acceptable and that the amount is not too small for an SPIA. Then make provisions for any future cases.

So it seems unlikely that coverage stopped immediately at the exact time of the termination, but most likely continued either for the rest of the day or for some short time after. This brings back the question of exactly when on 1/31 were these medical expenses incurred?

Regardless of what type of account this really is, I think that the issue of the termination has to be settled. In my way of thinking a termination as of January 31st either includes a part of the day, the whole day or the whole week during which that date occurs. Were the expenses that were incurred on 1/31 incurred after the time (not the date) of day of the termination? Did you see the Dr etc before or after you were told of the termination? There also is a question, in my mind, about when health coverage can be terminated. In all non-small group plans that I can remember seeing, the coverage is paid for on a monthly basis. As a result the whole month of January would have been paid for. Can coverage be terminated by an employer while the insurer still has coverage paid for by the employee? In fact, can an employer terminate coverage or does the employer notify the insurance company to terminate the coverage under the policy issued by that insurer? In other words, Who really has the authority to terminate coverage? Did you get a refund for the 1 day unused premium? Did the insurance company cover the rest of the charges incurred on 1/31? I think it raises some serious issues if the insurer still honored coverage on 1/31 and paid their portion to the service providers but the reimbursemant account adjudicator does not want to reimburse for the co-pays etc for those same services. As a separate issue, Was COBRA offered to you and what items was it offered on?

Joel I have seen many plans which did not require a written document, have one. It seems that it was a decision to either be prepared just in case, or just because it seemed prudent to have one so that there less chance of misunderstandings.

Shouldn't the CBA, the VEBA and the Health Plan PD etc already state what the money must be used for? If they do not, can such a change as you propose be done without renegotiating and amending the CBA etc? I would have thought that at least a portion of the money that the employer contributes would already have been allocated towards specific health insurance coverage that the union plan would already have in place, so I wonder what these other insurance premiums that would flow from the HRA/HSA would be for. The money in the "dollar bank" already has some being used for premiums so all that is left for coverage the is out of pocket medical expenses. Why not use a standard section 105 Medical Expense Reimbursement Plan to cover these out of pocket expenses? Don't you already have this in place? What you describe seems no different from Benefits Credits in other employee benefits programs. Have you compared what you want with the plan described in PLR 200007021?

If he establishes a 401k plan to contribute 100% of any earnings from self employment up to 15k, but because he is retired he ends up having no income from SE, How long can he continue to do this? What are the restrictions on the length of time that he can have $0? That is what I see as his potential problem, so I wonder what happens in that case.

Don, What are these specific guidelines? Chloe, You might want to look under your state insurance regulations both the statutes and the Administrative Code. What you are referring to, if I understand you correctly, might be under the sections that address rebates, incentives, inducements and unfair business practices. If this is a small employer (under 50 employees) there might also be something else under your state Small Group Health Insurance laws that prohibits any form of reimbursement and incentives or inducements. Whether a prohibition against rebates, incentives to buy insurance, inducements or reimbursements is applicable in this particular case could very well be a facts and circumstances issue. Sometimes it all depends on how it is done.

Since you find it difficult to understand my timeline, here is the same thing but from AXA: http://www.axa-equitable.com/pressroom/milestones2.html http://www.axa-equitable.com/pressroom/milestones3.html See 1991 in the first and 1992 in the second link. By the way, What does the name change in 2004 have to do with anything?