GBurns

If the spouse is being sent to an area where coverage is not available and there is no alternative coverage, it should qualify as a "Permitted Response by Employee to Curtailment resulting in Loss of Coverage".

rlb64 You posted this as an HRA question, but yet you state that you contributed through an election to this account. Are you sure that you mean HRA and not FSA? I also do not understand "my total elected amount, some of which is covered by employer contributions" . An employee cannot contribute to an HRA but both the employee and the employer can contribute to an FSA. The employee election is done through a Salary Reduction Agreement and then deposited to the FSA account. The entire amount of the annual "total" for the FSA must be available to reimburse submitted eligible expenses immediately and is not dependent on the amount "deposited" to the FSA account. An FSA is therefore not prorated. The issues, however, depend on what you really mean and have. I also have yet to see or hear of an HRA that credits the employer "pledge" in a lump sum at the start of the year. They either credit monthly or as expenses occur.

Please clarify: "some owners contribute 50%, some contribute 70%" Why would these owners be contributing to a plan that does not cover their employees and for which they are neither the employer nor a co-sponsor? If the employee contribution scheme is not addressed in any of the documents, What is the rationale for thinking that it is okay?

taylorjeff Do you know how many states the Security Life or any of the other plans, are approved in? And what size groups are any of them approved for? From my recollection, very few states have approved any of them and those that have any sort of approval, have size restrictions etc.

You said that your husband was "considering" not that he had taken the new job and left the old. So the only thing that getting the wrong COBRA rates should do is to cause you to do some recalculations and reevaluations. These things happen. It is a part of life. The only reason you would know if you have ever given out wrong rates, yourself, is if someone bothered to complain. Considering the low number of people who do take COBRA, it is very unlikely that anyone would have complained. The end result is that because of low numbers and few takers, there would be no complainers to have pointed out any errors that you made. So you really do not know for sure. You were considering the change before you knew what the COBRA rates would be, so I also have to wonder about your rationale. If the COBRA rates are too high, why not just go straight to the AICPA plan? You already decided that that is where you would eventually go, and you made that decision before knowing what the COBRA rates would be, so it seems that the COBRA should not be that much of an issue. But, it seems odd that the difference in rates could cause so much consternation. If what should be less than $500 per month (definitely less than $1,000) is causing all this grief, I wonder why he would be changing jobs.

The employer contributions that I have seen, have all been pro-rated. If the annual amount is $500, it is contributed as $41.66 per month subject to reaching the cap of $500 or termination of employment, whichever comes first. I have never seen any where the employer contribution had a connection to the employee election amount.

I cannot quite get a grip on this one. Is the management company also the Plan Sponsor? Are these "owners" co-sponsors of the plan? Why would these "owners" (who seem to be the clients) be contributing to the Plan? What do you mean by "similarly situated employees of the same employer "? Who is the employer? The management company or the "owner"? If these are FT employees of the management company, How can they then also be employees of these "owners"?

That raises the question of What is the relationship between a non-employee Director and the company whose Board he/she sits on? Is the non-employee Director being self employed or being an IC to the company?

Provided that there really was embezzlement, otherwise there would be no judge. Being accused is not the same as being charged, and being charged doesn't mean that the employee might even be tried much less convicted.

taylorjeff There are 2 different requirements to be insurance. The state DOI and the IRS. Even if the state approves a product that does not mean that it meets the IRS "at risk" requirements etc. This point is made in the caveats of those products that do have an Opinion Letter. Here is a link to the 200 E&Y Opinion Letter for Exec-u-Care: http://www.benico.com/PDF%20files/EYLong.pdf Note the wording and the argument regarding premium structure especially the mention of "a cost plus arrangement" on page 10. So the question still is, Whether the premium arrangement meets the IRS requirements for "at risk" and "insurance" etc, or is it just "a cost plus arrangement"? I also, like Larry M, wonder why any employer would do it anyhow?

I wonder if in cases like this, the Dr can still use the same plan. Was he really self employed or was he operating as a P.A or a DBA? Many cases that I see really are entities with a FEIN and it is this entity that sponsored the Plan not the Dr as an individual using his SS#. Doesn't this make a difference? Also in selling his clients, did he also sell the lease and equipment or furniture? If he did, are the old employees staying with the new purchaser in that same location? If this is the case, Could it be that he is the terminated employee and the other employees are now working for a successor employer at the "same desk"?

JDuns The questions were asked in the context of the Original Post. Rollover of unused funds was not a consideration. Limiting the FSA was not mentioned either. It is a matter of "Employer has H.S.A. and FSA". The employee has a HDHP but no HSA. Same employee has an FSA (no limitations given) BUT the OP stated "But he also needs the FSA ". It was not stated whether or not the employee wants an HSA or also has an HSA. Since the OP said that "but..." it suggest to me that there is some issue that creates an "either or" or a "both" consideration. The OP asked "Can this be done? " and I am still not clear as to what "this" is.

In many of the posts the connection is being made with an insurance company as if the item was being provided by that insurance company rather than by the marketing company. The assumption seems to be that because the marketing material uses the term "underwritten by" it means the same as "insured by". I asked the question because many people think that because an item comes from or is associated with an insurance company, it is automatically insurance. This is a problem that surfaces quite often with self funded health plans and ASO contracts etc, but also comes up with other items as well. There are promoters of various "plans" who will use the administrative services of an insurance company or just "name drop" so as to imply a relationship that is not full disclosed to nor understood by the consumer. Legitimacy by association, if you will. 1 of the ways of determining whether or not an item is "insurance" is to see if the item is approved by any state regulator. All insurance products have to be approved either by the regulator in the state of domicile (group and association products) or by the regulator of the state of residence of the consumer. Also in most states items that are approved in another state (usually group products only) must also be filed for informational (and monitoring) purposes. Individuallly underwitten (non group) products have to filed with and approved by the state of residence of the consumer. This approval includes, rates, policy form, marketing materials and market conduct etc. To answer your question, Yes many insurance commissioners would not approve for those and other reasons. Misleading is good, but not meeting reserving requirements or loss ratio etc calculations should also be considerations. Having monitorable items is always a consideration, and in this case the monitoring should be so unusual as to cause them concern. Aside from the insurance aspect from the state regulatory point of view, there still remains the "at risk" requirements of the IRC. This aspect is what is evaded in the Opinion Letters.

Jduns, Are you then also saying that: If the FSA is not limited, and the employee does not participate in an HSA, then the employee could use the FSA funds to reimburse "the spouses medical copays, ded, coinsurance, etc"?

Did the supporting legal documents, such as the Opinion Letter used, claim that Security Life was "at risk" or that the product was covered by an insurance policy? All the OLs that I have seen, caveat this issue by stating that an opinion is not being expressed as to whether the Plan qualifies as insurance. The issue being the "at risk" question. Why do you think that Security Life is "at risk" and why was it "insurance"? Being "underwritten by" is not the same as being "insured by" or being "at risk". Insurance products have a state Dept of Insurance approval. Do you know what state approved it and either the approval number of the approved policy form number?

I guess that I am not understanding. Why would the employee want an HSA? What would the HSA do that the FSA is not able to do?

Just so that I am sure that I understand your question. What does the employer having both an HSA and an FSA have to do with the employee having an FSA only and covering the eligible expenses of all his family members including his spouse? The employee does not have an HSA. Is that correct?

Congratulations Dave. Thank you for a truly unique service of immense value.

Shouldn't it be "The MEWA litigator of this department of insurance " who should be asked for the specific rules etc, first? He/she would be the best person to support whatever their position is. We would be speculating not knowing their reasoning nor even knowing which state it is etc.

The problem is with option 2. Where would the employer get such "an individual fully insured policy (no gimmicks) that would cover these expenses" that would not create problems? As previously pointed the question of whether any of the named or available products qualify as being insurance is unanswered. This issue is skirted and avoided in all the Opinion Letters related to any of the available products.

What state provided benefits are you talking about? Food Stamps, UC ?

aarondc, "I also pay myself on a 1099 a fee of Y each year". Do you pay yourself or does the partnership pay you? Also, investing in the SEP is a separate issue from sponsoring a SEP.

QDROphile, He is the managing partner and until this new employee starts, is the only person providing service. Would he not be an employee? But, he also stated that he is a consultant. This would make him not an employee. Since he can't be both, is there not a mess? Since he most likely is an employee, is there not a mess?

Thank you JanetM. There is an old saying about a picture being worth a thousand words, hmmm ?

I find it amusing that the "weight" of the Proposed Treasury Regs is being questioned in this case, yet almost everyone accepts the Proposed Treasury Regs related to section 125 cafeteria plans which carry the additional burden of having been "discredited" by so many courts. Also almost everyone has been accepting as law the Notices that the IRS has been issuing regarding HRAs, HSAs etc. Notices have even less weight than Proposed Regs don't they?