Christine Roberts

Employer maintains money purchase pension plan for Davis-Bacon employees, only. Subsequently employer adopts a SIMPLE-IRA for office workers who could not participate in MPPPlan. Employer also contributes to SIMPLE plan on behalf of Davis-Bacon employees. Prior discussion of this issue (link= http://www.benefitslink.com/boards/index.p...revailing+wage0 does not resolve question for me as to whether SIMPLE-IRA is disallowed in its entirety, or only with respect to Davis-Bacon folks. Any comments appreciated.

C-corp that has sole shareholder plans, for tax reasons, to create a wholly owned subsidiary and transfer all employees, assets, and benefit plan sponsorship to the subsidiary. Subsidiary may be purchased by third party some time in the future. Other than amending plans/insurance policies to name subsidiary as adopting employer, are there any other steps to take, or potential pitfalls?

I agree with you both - thanks much.

If HR staff employed by a company with a self-funded plan assist employees with questions on their health plan claims, and the HR person needs PHI from the health plan, is a written authorization not required? I have seen some interpretations that it is "health care operations" to share the info with HR and am wondering if I am missing something. I am also assuming its a different situation if employee gets help from the TPA or insurer acting under ASO agreement - TPA/ASO can get PHI from self-funded plan pursuant to business associate agreement. Any thoughts/comments appreciated....

If a participant is terminated as part of a possible partial plan termination, then rehired without loss of any vesting or plan benefits (other than failure to make salary deferrals during absence), can that person be disregarded for purposes of counting those affected by the partial termination? Would answer be different if person lost eligibility for employer matching contribution due to failure to defer during absence?

My reading of the HIPAA regulations imposes the written authorization requirements on covered entities only. However I understand that carriers are requiring TPAs to obtain authorization forms from individual participants in the group health plans they administer, in order to handle claims. Wouldn't all TPA uses of PHI be covered under the business associate agreement with the covered entity, whether it be an insurance company or a self-funded plan?

The medical, dental, and vision arrangements are all "health plans" under HIPAA. I think you need to start with how your plans are documented and whether they report separately to the IRS with Form 5500. If any of the component plans reports over $5 million in claims or premiums on a form 5500 you have a large plan. I would argue if you have a wrap document and any one component exceeds the $5 million threshold, the whole arrangement is subject to the April 14, 2003 deadline. But I would welcome differing opinions/comments.

HIPAA deadlines are keyed to calendar days, no? If anyone can provide a citation that would be appreciated.

Fully flexible Section 125 plan keys its opt-out benefit to the premium cost for group health coverage. Group health coverage premiums are increasing 30% this month. Employer wants to increase cash opt-out benefit accordingly. Is this a basis for employees who have opted out of group health coverage, to make mid-year election changes to allocate the increase $$??

Yes, fortunately or unfortunately employers that are covered entities must use their discretion in this area. One thing that becomes important if any human resources personnel are doing double duty in the HIPAA context is that they aggressively document the performance-based reasons for any adverse employment action that they take against employees who participate in a self-funded health arrangement, whose PHI could have been available to the human resources personnel. If HR people who view PHI simply vote "yea" or "nay" on adverse employment decisions, they are automatically open to charges that the PHI they viewed prejudiced them against the employee. HR people who view PHI must also be counseled to abstain from participating in any vote or decision affecting an employee, if the HR person feels that he or she could not be impartial due to PHI that they have seen on that employee. I am counseling clients to avoid any staff overlaps between HR functions and group plan administration, if at all possible. But I am aware that for many smaller employers, duplicating staff in these areas is simply not going to happen.

See this thread: http://benefitslink.com/boards/index.php?showtopic=5430

HIPAA privacy rules apply to group health plans, not to employers, per se. Therefore, it would seem to make sense that an employer should enter into the terms of a business associate agreement only in its capacity as plan administrator of its group health plan. Any comments appreciated.

So an analogous situation would be a board of directors where a director who has a personal interest in a matter (say, whether her retirement benefit is doubled) would recuse herself from a vote on that issue but would otherwise partake in board votes? I.e., the HR person who processed a claim on someone would simply refrain from contributing to a company decision on the person if the PHI the HR person processed would possibly affect his or her impartiality on the HR issue? Thanks again for contributing to this discussion.

Steve72, thanks for the quick reply. Realistically, how can an individual who processes claims at a self-funded plan not be influenced by claim information however subconsciously or subtly, whe he or she is wearing an "HR" hat? For just one example, presume a HR employee spends the morning processing group health plan claims submitted by Employee X and notes the employee has multiple prescriptions for drugs that are widely known to be for depression and anxiety. In the afternoon, the same HR employee is asked to sit in on a meeting in which other HR personnel discuss a pending proposal to assign Employee X to a new project for a major client that is high-pressure and high profile, with a very tight completion schedule. How could the HR person not "give pause" about recommending the assignment, given his or her knowledge about Employee X's prescription use? Sorry to play devil's advocate....

HIPAA requires segregation between an employer's business functions, and administration of its self-funded group medical plan. In the real world, human resources personnel at such businesses peform some HR tasks such as hiring, firing, and discipline, and also help administer claims and perform other health plan functions. HIPAA requires that employers strictly segregate these functions. HIPAA also requires appointment of a privacy officer. Also in the real world, HR directors are the likely candidate to serve as HIPAA privacy officers because they are usually much more familiar with the group health plan than are folks like the CEO or CFO (of course this can vary greatly). Many employers out there are just not able to create a salaried position of privacy officer, and many also don't want to hire the number of people it would take to totally segregate HR functions and group health plan functions. I am curious as to what practitioners are advising clients in this regard, and whether TPAs are stepping in to help bridge the gap.

Thanks for the reply - so is it safe to say that, if the plan DID file for an extension in October, 2002, the relevant plan year for assessing the $5 million dollar threshold is the plan's last full fiscal year ending before October, 2003??

Are there any provisions in HIPAA that relate to plans that dip above or below the $5 million annual receipts/premiums level on a year to year basis, similar to provisions related to the the 100 participant threshhold for Form 5500 filing? I am unaware of any but am wondering if anyone has some leads on this issue. Thanks....

Thanks for all the comments. I agree with your conclusions. A client had "heard" about the constructive receipt problem and though it made no sense to me I wanted to canvass other practitioners to see if there was some new ruling or other development I had missed.

Is anyone aware of an IRS ruling in re: transfer of accumulated vacation benefits from one employer to another causing constructive receipt of the vacation benefits?

Presume a large group of retirees have won a class-action settlement arising from a broken promise to provide lifetime health benefits. Individual award amounts will range from $1K to $100K. Is there any way to use a VEBA or other arrangement such that settlement funds will be put towards medical coverage or care in a manner that is nontaxable to the plaintiffs? I am exploring VEBAs, 401(h) arrangements, 105(h) arrangements, HRAs, "retiree medical accounts (a Watson Wyatt product, I believe), and uninsured plans under 104(a)(3). Any and all comments and suggestions are appreciated.

It seems to me that the Bush Administration's proposals re: ERSA are ignoring the lessons I thought we had learned about 401(k) plans - namely that the more discretion and control we give to individual taxpayers over their retirement savings, versus an employer funded and managed retirement scheme, the less they end up with in the end. Even with the incentives of employer matching contributions, and current income tax deductions, many working people are saving only a small fraction of what they really need to live on during retirement. Can it really be that they will save more, if we take away the tax deduction and employer match? This would be a problem even if you ingnored the grevious tax deficits the proposals will ultimately cause.....

Small not for profit org permits employees to establish TDAs with TIAA-CREF. Employees have a "reasonable choice of investment alternatives" within TIAA-CREF universe. Is the 403(B) arrangement still within the ERISA exception even if only TIAA-CREF offers accounts/annuities to participants? My understanding is that DOL Reg. 2510.3-2(f) does not require employer to seek out other funding alternatives. Employer also maintains a employer contributory only 403(B) plan with TIAA-CREF that does comply with ERISA.

Thanks for the thorough response.

Top-hat NQDeferred comp. plan allows participants to elect to defer a bonus prior to 12/31 each year, and also allows them to designate the distribution date, and the size of distribution (e.g., $20,000 distribution may be made in two installments of $10,000 each). These distributions may occur during employment; i.e., plan does not restrict distributions to death, disability, retirement or other termination of employment. Is this arrangement permissible (i.e. it avoids constructive receipt) so long as "haircut" penalty is imposed on in-service distributions? Is "haircut" penalty necessary to avoid constructive receipt? Any and all comments appreciated.

This is an interesting plan documentation question. Not-for-profit employer established a 403(B) plan in 1966, calling for employer contributions only (no deferrals), equal to 10% of compensation. Money is contributed to individual TDAs of employees. At some point (possibly even prior to establishment of employer-contributory plan), employees are permitted to make salary deferrals to their own TDAs. This "plan" is not documented and would appear to meet requirements of ERISA exception for 403(B) arrangements with minimal employer involvement. Employer now wants to restate plan document. Is it necessary to treat the entire arrangement (i.e., including deferral arrangement) as subject to ERISA and address in a single document? Or is it OK to restate the employer contributory plan, only, and not mention deferral arrangement? Is the answer different if the employee salary deferrals and the employer contributions are made to the same TDAs?