Gary Kushner

Yes, in a similar variant. The common theme was that the net effect was that the participant had zero unreimbursed expenses, yet had received an HRA reimbursement (it wouldn't matter if it was an FSA either). The proper procedure is to have the employer attempt to recoup the now-overpayment from the participant. Failing that, the $1,000 in your example would be W-2 income subject to all regular payroll taxation (FICA, Medicare, FUTA, and possibly SUTA), and should be addressed via payroll processing and tax reporting.

The correct answer is (c). Answer (b) isn't even feasible since it would entail amending the plan in a prior plan year. Whether you allow 45, 90, or even 365 days in runoff, someone will always claim that they didn't receive the bill until after the deadline. Harsh I realize, but you do want to keep your cafeteria plan qualified, right?

Chaz, this isn't an ACA issue but rather (as you've identified) a technical disqualification issue under Section 125(b)(1) and potentially 125(b)(2). The medical opt-out feature is only available to an HCE. Therefore, HCEs and key employees are in constructive receipt of the highest value of available coverage, and would have to be taxed regardless of their individual health-or-cash election.

Luke and Chaz are correct that if the employer offers any group health coverage, it cannot establish a QSEHRA (IRS Notice 2017-67/Q&A-4). And you're correct that you can only offer that kind of incentive by an employer with fewer than 20 employees since otherwise the Medicare Secondary Payor rules would kick in, prohibiting any incentive to drop group health coverage in favor of Medicare. If these are active employees, and you can pass the 105(h) nondiscrimination tests on eligibility and benefits, there is a narrow tightrope that you might be able to navigate to enable a "regular" HRA that is limited to reimbursing only Parts B and D Medicare premiums in an under-20 employee organization.

Not legally under Section 125 and the regs, other than equally to all participants.

Yes, since an FSA forfeiture is technically the employer's money anyway. An employer can use the funds to offset administrative expenses or else return the funds on an equivalent basis (regardless of how much any individual forfeited) to participants.

I agree with Tom Geer. I'm not sure how other respondents could read IRC Section 72(p)(2)(A)(i) and not see the reduction for the highest outstanding loan balance over the previous twelve months from the date of the subsequent loan request. How do you ignore this? ------------------ _________________________________________________________ Gary B. Kushner, SPHR, CBP (mailto:gkushner@kushnerco.com) President Kushner & Company 141 E. Michigan Avenue, Suite 400 Kalamazoo, MI 49007 (616) 342-1700 http://www.kushnerco.com