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WFTRA - When Federal Troglodytes Run Amok

LRDG wrote: It's administratively highly unlikely (impossible?) for every election form date to coincide with the effective date. For the vast majority of our employees, their first day of work is "New Employee Orientation", where they also sign up for benefits. We receive about 98% of enrollment forms on this first day of work. Our plan rules have elections and coverage effective the first day of the month following eligibiltiy and enrollment. If we had a similar rule with hourly employees as does kimb, most would be enrolled and effective on their first day of employment. I agree with LRDG that the effective date cannot preceed the election; the election MUST come first.

Don, Absolutely not. The money cannot go back to the employee. We have this happen infrequently but the contributions not sent to the carrier become "plan assets", offsetting any payments made by the employer for administrative expenses. Practically speaking, most folks keep the coverage if they are having to pay for it anyway. We run into more issues with dependent ineligibility where 125 changes are (must be!) prospective but the loss of actual coverage is retrospective. Resulting credit from insurance carrier offsets carrier debit items and we "true up" periodically, which usually results in the carrier sending us a small check a couple of times a year.

Don, The payroll deductions must continue, but they don't have to be sent to the carrier. Julie, I agree with the other posters that there must be a qualifying event of some sort to permit you to make a change under your plan, IF your premiums are taken pre-tax. It sounds like there is an option under your plan, so you might want to verify that your deductions are actually being taken pre-tax, and if not, then you might have the flexibility to make a change. You might provide a little more info on the situation to see if one of the crew can help you come up with the justification for a qualifying event.

How about $2400 election, $200 paid in January, terminate Jan. 31. COBRA is $204 per month. Elect. Pay in Feb, March, April - total paid in is $812 (200+204+204+204). Have $3000 dental implants done in April. Submit claim for $3000. Reimbursed $2400. Make no more payments. I WIN!!

There may not currently be any OOA's, but what would you do if you had one, cut them off or provide access to a plan? If an OOA active is TOTALLY IMPOSSIBLE, you may not need to offer anything special, but your situation with the controlled groups and such is out of my realm (large governmental plan) of experience, and I would defer to a pro seasoned in this area as suggested by Kirk.

Do what you would do for an active employee. If you have a plan with an out-of-area coverage option, let the COBRA switch to it. If an active would get a new separate plan, you need to do the same for the COBRA. If it is "too bad, so sad" for an active employee and they would lose coverage access, same goes for the COBRA.

I, too, now see this differently than I did my first time. And I agree with leevena.

This is not my primary area, but I suspect that any notification requirement is dependent on the reason for the change. My experience with our retirees is that they will call when changes occur, so you can head off some (but never all) of the calls by providing notice of changes. Our pension amounts used to be subject to change several times per year: 1st of the year tax rate changes, 1st of the year health plan rate changes, April 1st annual COLAS, July 1 changes to medical subsidy payment amounts. Some sort of notice was usually (but not always) sent to head off the phone calls, but I'm not sure these notices were sent due to any legislated requirement. Actual reductions or increases in benefits would, I think, need to be noticed, but this will likely vary by state. In CA, the Government Code has a myriad of details about when and how notices must be provided.

Why must she pay now? A change in the need for care is a qualifying event (if permitted under your plan) that would allow the employee to make an election change. Yes, the care must be actually provided in order for reimbursement to be made from the DCAP account. You wouldn't necessarily need to wait until the end of the summer for reimbursement; reimbursements could be made pro rata as care is incurred based on the payment dates authorized by your plan.

The item below is from the DOL Website. There is more information available there. 6. A Plan’s Special Enrollment Provisions Must also Permit Employees and Dependents (Who are Otherwise Eligible) to Enroll upon Marriage, Birth, Adoption, or Placement for Adoption Example: A group health plan allows employees who are already enrolled for coverage to add dependents upon marriage, birth, adoption, and placement for adoption. However, if an employee is not already enrolled, the plan does not permit any enrollment when these events occur. Tip: HIPAA allows eligible employees and dependents to enroll upon marriage, birth, adoption, or placement for adoption. Group health plans are required to offer special enrollment to otherwise eligible employees, spouses, and any new dependents upon marriage, birth, adoption, or placement for adoption. Accordingly, an employee who is otherwise eligible, but not enrolled for coverage, can enroll (and can also enroll a spouse and any new dependents, if they are otherwise eligible under the plan) when any of these events occur. The plan should amend its special enrollment provisions to allow employees and dependents who are otherwise eligible to enroll upon these events.

Yes, provided that the enrollment request is within 31 days of the event.

Benmark, if this remains a concern, you may well want to include some sort of "electronic transaction" authorization that requires wet signature at the time of hire or presentation of right-to-work documentation. Then good disclaimer and hold harmless agreements to your electronic portal, especially to the new employee's initialization process. I think that an electronic signature set up with proper security, especially in a closed environment like a benefits enrollment application, shoud be quite acceptable. How long before we stop meeting our new employees and everything is done electronically save for a notary who does a home visit to get some signatures and documentation? Can't be too far off.....

Is the incarceration related to the job from whence came the COBRA? If not, on what basis would you deny COBRA continuation unless the person failed to pay? I suppose if the jail is located outside the plan's service area, and there is no viable coverage option available through your plan you could terminate coverage, but this would be related to geographic location, not inmate status.

I wood knot know what yew are talking about.

Instead of Bob, how about "Stew"? ... and the guy on the porch? ... or on the wall? And what about the dog?

This just sounds like a request to drop the kids from coverage. If they had already made, say, 3 payments, and then sent in just enough for self and spouse, would you drop the kids for non-payment? I would be inclined to continue whoever is being paid for based on your normal structure.

I think GBurns is on track suggesting that they might consider making an administrative correction based on mis-information. This looks to me like your only way out, but it's at best a marginal hope. Get a copy of the plan document and study it. Put your request to rescind your election in writing, and be really nice about it. (Plan administrators have to deal with lots of cranky people who are mostly mad at their own screw ups and think they can bully their way through. It is refreshing to deal with a reasonable, polite person - it makes you want to help.) Probably base the request on rush to enroll, lack of clarity of materials (eg. your thinking that it was a FULL ANNUAL AMOUNT, this might at least get you a partial pro rate), or similar, but keep it objective and cite any plan provisions sections of informational or enrollment materials that you feel are unclear and led you astray. "In retrospect, I made a mistake" might be the bottom line, but it won't cut it. You need to give them something to hang their hat on that you might have relied on something you were told, to your detriment. It's worth a try. But in the end if it doesn't work, your $500 really only cost you a little over $300 because of the taxes you would have paid had you not made the election at all (and you would have had to pay much more than $350 for the education you have received about how cafeteria plans work!); and if a $350 mistake is the worst you ever do in life, you'll be way ahead of me! But especially, keep using the plan and you will reap the tax savings for year to come, and more than recapture this year's loss. Good Luck!

Why not set up your plan with "rolling" elections for the POP portion? This is permitted and it saves you the trouble of having to require forms each year. Mostly it saves you the headache of trying to track down those who don't take care of their business and return their annual form, as well as the bad PR with other employees who wake up a couple of years later realizing that a significant tax benefit has been lost.

You note that most compensation comes from tips and such. So why would you want to exclude them? If the default is a percentage of pay, then in any event it is a small number for these folks, and they need to save for the future, too. And aren't they free to opt out at any time? Isn't the goal to avoid people's inertia to get them started with the program, and then count on their inertia to keep them there? If you exclude them, your message is "To our valued employees: we think saving is so important, we help you get started with automatic enrollment. But you guys who make mostly tips, we don't think you are going to make enough money here to save, so you aren't signed up." Sign 'em up like everybody else and let them take themselves out if they choose.

Can you avoid the issue by dividing the annual amount by 24 and then applying it only to the first 2 pay periods in any given month? This also helps avoid the problems that occur in (the infrequent) years when you have 27 pay periods.

Using an electronic or telephonic enrollment system, your employees - anywhere in the world - are never more than a couple of seconds away. It's just a matter of planning and communication.

I would consider a heating pad to be for therapeutic purposes, more so than for personal comfort. Unless specifically excluded by the Code, I'd be inclined to allow it.

With your notice provision, based on the new case interpretation, I would think that I have 17 months and 28 to 31 days (depending on how the months fall) to elect COBRA. This is too long. You have given me "a minimum of 60 days" but have put no maximum election cap on it. To fix, remove the word minimum so that "...you have 60 days from the latter of the date of this notice, or the date of your qualifying event, to make an election".

I'm new to loans so just curious. Demo, the interest accrues, but wouldn't it be as a memo amount that needs to be repaid to cure the default, rather than as a charge against the remaining cash balance in the account? How can accruing interest that is OWED TO the account wipe out money that is already IN the account? How can $100 payout be correct? eg. $10K - $5K loan = $5K cash in account (which never grows?) Loan defaults and accrues interest and Part now owes $9.9K to cure. $5K cash still in account. (OK, it grew until early 2000, then crashed with the rest of the market, but is now back up to $5K.) Part CURES the default by paying $9.9K into the account. $9.9K + $5K = $14.9K Now wants to close, so you send total balance $14.9K. Wait a minute, I thought we were only going to pay out $100 because of the default? But if we add the $9.9K default cure to the $100, there is only $10K available, not $14.9K. Is this 401(K) math? Hmmmm... Did loan fees eat up the other $4.9K? Just trying to understand....