MD-Benefits Guy

I am working for a new company that has the following rules in place for new hire benefit elections: Benefits are effective 1st of the month following hire date and employees are able to make changes for 30 days after eligibility date. Under these rules, it is possible that an employee could start Sept. 2 and have until Oct. 30 to make election changes that would be retroactively effective back to Oct. 1....in this situation, the employee has almost 60 days from date of hire to make an election I am wondering if this violates what is permissible under section 125? I thought in order to be qualified under Section 125 elections, had to be done before an effective date unless we are dealing with the birth of a child/adoption or a new employee who has a 30 day window from hire date to have the benefit be retroactively effective. Can someone please point me to the language in section 125 (or other legislation) that states that the election must be prior to effective date (that the election cant be retroactive) and the section that specifically permits new employees a 30 day window from hire date to go retroactive. I am able to find the proposed IRS rules from Aug of 2007, but not able to find what was finalizeed Thanks.

I'm at a new company that has the following parameters in place for new employee initial enrollment: All benefits are effective on the first of the month after date of hire. Employees may make elections for 30 days after eligibility starts. Example, an employee who starts 9/10/11, will have a benefit effective date of 10/1/11 and have until 10/31 to make changes to his/her elections. I have been told that all elections made in this initial 30 day window will have an effective date retroactive back to 10/1/11. I am concerned because I do not know if this is permissible for certain benefits. HSA account - From what I know about HSA's, the effective start date of an HSA is tied to when an employee actually establishes the HSA at the bank. HSA establishment guidelines vary from state to state depending on the particular state law pertaining to trust/custional arrangements. Some states do not consider an HSA established until it has been funded. Expenses that are incurred prior to the establishment of the HSA are not qualified medical expnses under the HSA. It is being communicated to the employees that they can seek reimbursement from the first of the month following hire date. Can someone please confirm that FSA account - I believe that Sect. 125 allows for employees to make elections that are retroactive up to 30 days from an employees hire date. Meaning if an employee is hired on 9/10 and makes and election within 30 days, the law allows for the FSA effective date to go back to 9/10. However, what I am seeing in practice at the new employer - with a Hire date of 9/10, they are allowing emoployees until 10/31 (beyond the 30 days from start) to make elections and telling them that it is retroactive back until 10/1. Is this permissible.....I don't think it is. If the eleciton is made after 30 days of hire, the effective date of the plan would be the day the employee signed the document...right? Can somone provide some insight or point me to a document that supports this. Thanks in advance.

At our company, employees become benefits eligible on the first of the month after hire and then have 30 days to make elections. To illustrate, an employee who started 9/25, would be eligible for benefits on 10/1 and have until 10/31 to make elections. My question is regarding benefit start date....If an employee were to wait until 10/15 to make benefit elections, I believe that it is permissible to have the medical, dental, vision and even life insurance policies start retroactively on 10/1. However in regards to HSA and FSA, am I correct in saying that those policies by law cannot go into effect retroactively and only qualified expenses incurred after the employee made the election are eligible? Thanks.

I have an employee who finalized a divorce in March and switched from Family HDHP to Individual HDHP. What would the federal limit on contributions be in his case? Would it be a prorated portion of the family limit?

I am trying to better understand the legal requirements pertaining to a POP and I am having some difficulty. 1. I have heard that in order to meet the legal requirements, employees must have a choice in actively electing a salary conversion/deduction to cover their premiums...however, most companies that I have encountered or spoken with, do not have a seperate form/document for employees to make such an election. Some have told me that by default, electing any qualified company benefit with an employee premium satifies the "choice" requirement. I think this might work, but if so, then shouldnt there be some language in the plan documents that specifiy...."by electing to participate in the Company Medical Plan I uderstand that I am electing to have a portion of my salary used for the payment of medical premiums" or something to that effect? Can anyone share such language that appears in your plan docs? Or how are other companies handling the requirement for employees to choose cash or premium payments? 2. Plan Document....I believe that one is required, but are most people doing this as a stand alone document or combining it with the Flex Spending Doc? Would it be appropriate to put the POP document into a wrap document? I dont believe a POP requires a 5500 filing? 3. Testing....If the POP is available to all, how could it fail testing? What testing needs to be done and how are other people handling the testing? Thanks in advance.