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Not that familiar with medical stop loss, but on other lines I've seen annual policy limits. You may not want to risk having the equivalent of a 12 month policy limit covering a 16 month period.

Assuming a calendar year determination period, and a fiscal year (7/1/xx) plan year, can NEW COBRA participants be charged a higher premium (based on the new, higher plan year premium) than the existing COBRA participants? e.g. dental plan premium is $100 for family, goes up to $130 on July 1, 2002. COBRA participant effective on 6/1/02 is charged $102. Will be changed to $132.60 effective 1/1/03. Can a new COBRA participant on say 8/1/02 be charged the $132.60 rate based on the $130 premium in effect on the date of loss of coverage? Thanks.

How about a comment on a real scenario. Employer pays $15K basic for all employees. No tax problem. Employer provides 1 option for employees to "buy up" coverage to 1x of salary with a limit of $50K (so the most any employee can buy is $35k of coverage; $50K-$15K=$35K). Employer pays this cost for some employees based on union contracts. (no tax issue here, it's $50K or less. Correct?) But for employees who pay, the rates are "split" at age 40, so under 40's pay $.18/thousand/month (higher than the table rate) and the 40-and-over group pays $.30/thousand/month, which stradles the table 1 rate. (40-54 under pay more than table 1 rates, and 55-and-over pay less than the table 1 rates) Question: Is there an imputed income issue for the 55-and-over group, even though total coverage at this level is $50K or less?? Employer also provides a 2nd option of an additional 1x salary, limited to $50K, with rates tiered in 5 an 10 year bands. the premiums for every age band are greater than table 1, so no imputed income. Appreciate any comments on this scenario, especially the question.

Whether or not they elected as a family or as individuals (we have both occur) we would ultimately look at each individual's QB status and allow them to maintain coverage. Lots of caveats here, though. For example, if the employee had 6 kids covered and wanted to drop only their own coverage, each of the kids would have to be enrolled as an individual, as none would have dependency status (to qualify as a family) in relation to the other minors. On the other hand, a spouse and child(ren) who wanted to remain on the plan after the (former) employee drops coverage could be either a family, or enroll separately as individuals, which some will do if it is financially advantageous.

I'll agree with Sandra. As long as the dependent that wants to remain on the coverage would be a QB in their own right, we would allow that dependent to stay on, and let the others drop.

Another vote for "B". However, I'm not sure how "catch-up" contribution enters in. Even with the extra 2%, the employee has not yet reached the "normal" maximum contribution level.

We have mandatory plan enrollment (participants cannot elect "No Coverage"), and participants with other comprehensive coverage typically take our $10,000 deductible Cat plan in order to take advantage of our liberal "cash back" allowance. When they lose their comprehensive coverage through their spouse, they want to switch to one of our higher-level plans. We permit them to add their spouse and/or other dependents, but do not permit plan changes. Searching for cites to HIPAA regs that would permit a participant to make a mid-year election change from a Catastrophic type health plan to a comprehensive plan, based on the occurrence of a qualifying status change event (eg. spouse loses coverage under other plan, birth of a child, etc.). We'd like to permit the change, if we could find something in the regs to "hang our hat" on. Thanks.

Our cafeteria plan provides for salary reduction for health premium payments by employees. We have an insurance "subsidy" which, if unused to purchase health coverage, is mostly given to the employee. We do not consider this "subsidy" to be part of the cafeteria plan as not all employees (based on date-of-hire) are eligible for the cash-back feature. We have 2-tier premium rates and nothing other than medical insurance coverage for the employee to purchase with the "subsidy". Example: Employee is on plan A. Plan A premium is $180 for single, $480 for family. $460 per month in "subsidy" is available to the employee, so employee's monthly cost for coverage is $20, which is taken pre-tax. If an employee receiving the "subsidy" drops their last dependent, their rate goes down by a significant amount and they would be eligible to receive most of the "subsidy" amount in their paycheck. This is fine during Annual Enrollment or if we are within 30 days of a family status change event. But it is now September and the employee comes in to drop their spouse and it is determined that the date of the divorce decree was April 6th. We can make the premium change prospective, effective October 1, and drop the spouse retroactive to May 1 (if the plan allows). We will take whatever credit the carrier permits. The employee wants the premium credit back to May 1 ($300 per month). 1) Based on the regs, we cannot retro the election change for the employee, thus the employee's $20 per month salary reduction for June-Sept cannot be refunded. 2) But what about the "subsidy" dollars, which are not considered part of the Cafeteria Plan? Can these be refunded to the employee or are they also forfeitted? Sorry for the long winded story. Any thoughts or comments greatly appreciated.

Kirk, appreciate your reply. I really need to get as close as possible to treatment of experience refunds under an ongoing insurance contract. Ideally, I must locate case law or other significant guidance that is directly on point. Has anyone ever dealt specifically with this issue of distributing experience-rated refunds that are from a program with both employer and employee contributions? Your help will be greatly appreciated. Thanks in advance.

Kirk, appreciate your reply. I really need to get as close as possible to treatment of experience refunds under an ongoing insurance contract. Ideally, I must locate case law or other significant guidance that is directly on point. Has anyone ever dealt specifically with this issue of distributing experience-rated refunds that are from a program with both employer and employee contributions? Your help will be greatly appreciated. Thanks in advance.

Need some help (case cites especially)on determining permitted uses of dividend or policy surplus funds from group insurance programs. Specifically, have identified excess funds from a plan that is approximately 80% funded by employee contributions and 20% employer contributions. A proposal has been made to refund the money pro rata to the parties who paid in, whether or not they are still employees. (eg. 20% to employer, 80% to current and former employees. The possible universe is 66% current employees, 34% former employees/retirees.) The environment is highly unionized. Is anyone aware of case law that would either prohibit refunding plan monies to former employees or, conversely, would require refunding plan monies only to current plan participants? Appreciate any thoughts or leads.