GBurns

Now the question is : How well can it be restricted and still serve the purpose? Of course half way might be better than none.

Reading the examples of how to calculate the 80% and 50% etc should help you: http://employerbook.hypermart.net/CGRegs.html#r414

Can he rerun the payroll to rescind the deductions? Assuming that the rules allow him to adopt a 410(k) and enjoy the tax benefits in the same year that a SIMPLE exists, then this is what he could consider.

That is why it is separated in to 2 plans. 1 with what might be regarded as health/medical related and the other with the other items that can be treated as safety issues just like safety issues are treated as being OSHA or WC training. A good OSHA training class covers workplace decorum/behaviour, workplace violence and even ergometrics. Anything that relates to safety and injury on the job, whether how not to cause it, how to avoid it etc. For example advice on why not to come to work if your mind is on a household event that will distract you and potentially cause injury to another worker or yourself. How broad do you think this could be? A WC injury reduction class could cover on the job safety, causes of injuries, treating of injuries, avoidance of injuries and anything related including mood swings, depression, conflicts etc. Anything that can reduce injuries and claims.

I do not remember seeing the TPA, the investment vehicles, the bank or trustee etc referenced in either a determination letter or an opinion letter.

Isn't the interest includible starting at the same time that the deferred amount becomes taxable income? Imputed interest can only start when there is taxable income on which to charge it.

Maybe I am missing something. I thought that Plans made money by making investments such as purchasing shares of corporate entities, Bonds or other securities. And that it was the money earned from those securities tha was used to calculate the rate of return. How can the DC plan make money investing in another plan? What does the DC purchase? Shares, Rights, What? If I want to make the same rate of return as anyone/anything else I have to either purchase the same securities on the same terms or purchase something similar and hope that the similarity holds.

You might want to transfer this question to the 5500 Forum. Also do a search of the Board, this and wrap documents/plans have been discussed many times.

Using your first example, At what stage would this person stop being able to get further loans? Or How many further loans would be allowed?

Red, I think that you are taking the Regs etc out of context when you state "By following the guidlines of Section 125, you've avoided constructive receipt, and, as far as the IRS is concerned, never got this money at all". The Regs 1.125-1 Q6say that a SRA "will have the effect of causing the amounts ...to be treated as employer contributions" and "to have such amounts contributed, as employer contributions, ...on their behalf". The Regs do not make it not be employee money it only allows treatment for purposes of section 125. Phrases such as "the effect of causing" and "to be treated" indicate a dispensation for a stated purpose not a change in ownership. That is why you should read the wording used by the Judges in cases like Grande v. Allison where it says it is the employee's money. Note should also be taken of the wording in Phelps v. C.T. Enterprises which unlike Grande which relates directly to an FSA but still relates to employee salary reductions. As far as limits to what the employer can do, you might want to use Phelps and its references to see some of the limits.

If on Tuesday morning after the first $10K loan you do as you say and "Look back at total of all loans outstanding for the last 365 days and see what day had the highest balance" that day should be the Monday late afternoon and would include the new $10K thereby being $50K. Otherwise where is the $10K loan? Why would that first $10K loan not increase the total of all loans outstanding since it is now outstanding once it is made and it was made within the last 365 days rolling or otherwise. So the whole issue is whether or not a new loan increases the total of all outstanding loans. I cannot see why not and I know if I looked up the actual entries made in a ledger it woud have HOB $50K. I cannot see bookkeeping entries ending up otherwise.

Yes you need 80% depending on the type of controlled group, but the 80% depends on how it is calculated taking into account 318 attribution rules etc. See:http://employerbook.hypermart.net/CGRegs.html#r414 Look at the calculations for the various scenarios. Even then "common control" should be a problem and the you still have ASG, anyhow. I suggest that you look at "Who's the Employer" Q&A where you will find questions such as #245. Then do a search on these Boards (all Forums" for the many prior discussions on these issues. A Google search would also be good to locate the many good explanations and worksheets that have been published.

If on Monday the HOB is $10K and on Monday afternoon you give this new $10K loan, does that not make the new HOB on Tuesday morning $40 +10= $50K? This is not my area of expertise but I am using the arithmetic and formula that you gave in the OP which seems consistent with the Worksheet. Why do you stay at $40K after the new $10K loan? Where did the new $10K go?

k man I agree that it is your perogative but by that same logic clients can choose not to use your services. Be that as it may, I wonder why it is that you cannot support another document if amendmends are needed? Does that mean that you could support another document but only if no amendments would ever be allowed? I seem to have a problem understanding whether it is the support of another document that is the problem or it is the making of an amendment that is the problem. For the documents that you do support Who makes any needed amendments, your administration staff, your in house counsel, outsourced counsel or the client's counsel?

AshleL Have you had any further thoughts or other responses? I thought that by now there would have been some other suggestions or at least a critique of 2 of my ideas. You state in your OP that you are aware of employers who treat their EAP as not ERISA. Can you give me any further info?

Why would this not be a controlled group or ASG under both the IRS and ERISA?

(50 -(40-10) -10)= 10K The next day should be: (50-(50-20) -20) = 0K

Many have asked for disclosure of fees, expenses, compensation, relationships, investment strategies etc. The traditional answers, even when dictated by law, have turned out to be largely incomplete, evasive or outright lies. Whether it be consultant, investment advisor, mutual fund, investment banker etc. That is why Mr. Spitzer and some states are having a field day on these same issues.

Are you sure of 1.1.2005. How could claims have been submitted first to the Plan then to the stop loss carrier and a denial received already? How could $400,000 of a drug be used in just a few days? My answer assumes that the date is incorrect. If the date is correct you have a different set of problems. If I were that employer I would be considering making a claim against the Claims Administrator and the advisor who set up the plan. The establishing of a formulary is part of designing and establishing a plan. The known diseases and the drugs taken were all very visible on the claims experience on which the decision to go self insured would have been based. Someone did bad predictive analysis. The only mitigating circumstance that I can think of is that the person contracted this disease after the start of the plan and no one in the group had received any treament for that disease in the preceding 2 years that the claims experience analysis should have covered. But even then expensive drugs should be subject to authorization just like major surgery is. And even then the ongoing or periodic utilization monitoring should have raised a red flag so as to restrict the use of that drug and mandate an alternative long before so much was used. It also should have been known much earlier that the stop loss was not going to cover this. However, it could be that the stop loss carrier should pay the claim and is just stalling to see if they will get away with not paying. So the terms of the stop loss coverage and the grounds for denial have to be checked and challenged. If the stop loss carrier is correct, then the employer has to revert to making a claim against both the Claims Administrator and the designer/advisor. What can be done to continue providing coverage to the employees? The employer can either get fully insured or remain self insured. But both options require better plan design and control. The reason why the fully insured premium is so high is because you are just replacing the claims payer rather than repairing the plan design. The quoting insurer is only quoting to cover what you have not what you should have so that they can cover the same things that caused the loss. The quote would have been much different if you limited the formulary excluding items such as the 1 that cost $400,000. It also would help to have more utilization authorization and internal caps on certain diseases and treatments. Passing a larger share of the cost to the employee can be done and probably will have to be done. It does not matter whether the plan is self insured or fully insured. Cancelling and ceasing the providing of all health insurance might be possible and might negate the need for COBRA. But the employer might be subject to litigation from the employees etc and still liable for the $400,00 loss. Bankruptcy might be an option but creditors, goodwill and the ability to acrry on business even under another name might be impaired, more thought should be given to this alternative which could cost more even in the short term. Both bankruptcy and cancelling the insurance to get away from COBRA need serious legal advise. Please get this employer to seek competent legal advice. This Forum is not the place for a plan design treatise and so I suggest that this employer seek competent help next time.

From the website of your own Texas DOI: http://www.tdi.state.tx.us/company/lhcoop_lst_incl.html The reason why Purchasing groups were probably authorized was because of the difficulty of setting up a MEWA. High set up expenses, ongoing regulatory reporting, expensive operating costs etc. All of which would have been prohibitive for small employers even in a group.

I have not heard of any such pending legislation. Can you cite it or give a link? bear in mind that most legislative bills die and do not become law. I see many problems with your plan design with the employer contributing $200 to the employee HSA: 1. If the employee is declined for the individual plan they might not be able to get on the group plan. Timing of enrollment problems. Carrier participation requirements. Carrier restriction on other plans. 2. Employee backlash if an employee ends up with no coverage. 3. Cost effectiveness. As you reduce the size of the block for the group plan you to increase increase the cost. On renewal of the less healthy group you will have greater cost increase and these employees would not be eligible for individual coverage so they and the employer get trapped. This self destruction would occur within 2 years if not by the first renewal. 4. Employee communication. Since the employee would have to pay for the individual plan, there would be a reduction in their paycheck. The current paycheck is a primary focus of employees. 5. I doubt that on an annual basis you will be able to show savings to the employee or the employer sufficient to offset the risk or to be worth the effort. All of this is whether or not there really is the premium differential that you stated. I have not yet looked properly but a casual glance at the major players, Humana, Humana One, BCBS, Aetna, UHC does not seem to agree with you. However, you might be using lesser known names but I still have my doubts. Which companies wiould you use for comparison? There are many carriers that you might want to use who would be irrelevant to any discussion of South Florida as a region, because they do not cover the whole region with any effectiveness. Look at the coverage area of say NHP, CareAccess, Total etc. Some cover South Dade County but have next to no network north of MIA and none in Broward and Palm Beach. It would be pointless to claim a rate disparity using carriers who do not even have a provider network available in the required area even though they would issue the coverage and leave it up to the consumer to drive 70 miles in congested traffic.

Did it ever become law? Check with your Dept of insurance anyhow. Anyhow, I thought that Texas already had such purchasing groups. Purchasing groups are not the same as Coalitions. For example Texas Association of Business www.txbiz.org Many area Chambers of Commerce Whereas Coalitions are like : Dallas-Fort Worth Business Group on Health http://www.dfwbgh.org/

I never said that it bolsters the case for states regulating self funded plans. What it does is show that eveb in self funded plans, the employer is not free to do whatever they feel with the benefits. I certainly wish that you would improve your reading comprehension. Even when something is in a post you do not seem to be able to read it much less understand, for example what I have stated above at the end of the first paragraph is also at the end of my last post explaining the relevance of the link. The fact that you could not read and understand that, suggests that you might not be able to read and understand the cases nor the issues. This wa also pointed out by another poster. You now have a number of different posters who have all not only disagreed with your positions, but who have also addressed your inability to understand the issues. Why not drop the matter and save us all some time? Your time would be better spent learning about the subject matter. For example after all of this you posted "ERISA preempts the plans, however they are funded". ERISA DOES NOT preempt plans ERISA preempts state law whenever it is appropriate. This will be my last post.

Why would the payee/recipient matter? This is not a payout to a plan beneficiary in the absence of or death of the plan participant. This is a transfer of the rights of a current plan participant and should be based solely on matters related to the plan participant and be the same as the amount that would have been paid to the current participant as if he/she was the payee.

I guess that it would be best to ask someone who uses such initials. Might be a typo.