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How about considering it an administrative error, and correcting on that basis? Can the husband be considered ineligible based on his current residence?

Seeking guidance from the pros on deferrals from final pay of deceased employee. Plan is governmental 457 plan. Final pay may include earned wages and/or leave balance payout. In instant case, employee requested maximum deferrals from final pay. Beneficiaries are different for deferred comp account and final pay check, hence deferral from final pay is of great interest to both parties. Final pay is a significant sum that would permit full year deferral, including catch-up contributions. Date of death was mid-January 2004. How much deferral would you permit from final pay? Beyond the code definition of "compensation" eligible for deferral, is there any code cite, PLR, or other authority you can provide for permitting (or denying) deferral from final comp? (Our Payroll Manager is requesting code authority for our current practice of permitting deferrals from final compensation in the case of deceased employees.) Thanks in advance for the assistance and insights.

If leave is unpaid, can drop self or dependent due to non-payment of required premium. If individual coverage is fully employer paid, no loss of coverage occurs relative to the employee. I see nothing that would allow a change in plan coverage (eg. PPO to HMO) as this is not consistent with the event and there would not appear to be any special enrollment right that would permit the change. FMLA requires the employer to continue providing coverage and employer payments during an approved period of FMLA leave, either paid or unpaid. It also requires the employer to return the employee "back as they were" upon return from FMLA leave, if the return occurs within the FMLA period, including adding back any dropped coverage (eg. dependent coverage) as of the day of return.

Facts: Bob and Sue get married. 10 years later, Bob undergoes a gender reassignment process and becomes Mary. Sue comes to work for you and wants to add her spouse, Mary, to your medical plan. Counsel advises that Mary is still the spouse under terms of your plan as the marriage still appears valid under applicable state law, as there is nothing in the trans-gender process that would otherwise invalidate the marriage. Issue: The Defense of Marriage Act defines "spouse" as a member of the opposite sex. Question: What are the federal tax implications of the gender reassignment for your 125 plan? Is there imputed income for the employer paid premium? Must employee contributions for dependent coverage be post tax? Is your analysis different if both spouses work and Sue is the primary income earner, if Mary is the primary income source, or if Mary does not work? (Your plan permits same sex domestic partners and the tax consequences of this arrangement are known. Your plan permits a continuously disabled adult child dependent to be enrolled, but no other adult who is not a spouse or DP.) Looking forward to your insights on this situation.

Perhaps one of the list's legal eagles can provide an appropriate reg. cite or case on point. I cannot. But I think it turns on the interpretation of either "termination" of employment or reduction in hours. As an administrative interpretation, I would consider the employee to have terminated covered employment when accepting the union job and offered COBRA on that basis. As an alternative, you could consider the employee to have a reduction of hours in the covered postion to 0. I believe that it would not be prudent to fail to offer COBRA in this instance. Much better to agree beforehand with your carriers that this type of situation, though uncommon, will be covered rather than to end up in court over a large bucket of unpaid claims due to a serious accident or illness that occured during the waiting period between when corp coverage stops and the union coverage begins. "Big bad corporation takes advantage of poor helpless worker" ... no thank you.

The employee is moving to a class that is no longer eligible for the benefit plan he is in. The change in employment status is triggering a loss of coverage. Offer COBRA.

What is your plan's experience with "going into the hole"? I think it unlikely that OTC utilization would make your current problem worse. Look at plan experience in a larger context - perhaps over a multi-year period. Include the employer's tax savings in your analysis. If the plan starts consistenly staying in the red, amend it to take care of the problem or drop it altogether if the overall cost/benefit perception is no longer acceptable to the owner. I think you run the risk of alienating your employees with unnecessary restrictions. You are worried about someone gaming the system so you penalize me, your loyal employee, by not allowing me the full measure of an available tax break. I feel valued...

How has dependent care care expenses allowed this employee to work? (With a court order, I'm assuming there's a divorce going on.) Is the dependent in his primary custody? Short of transferring custody to the other parent, how could any court order affect the employee's need for dependent care? You may find that there is no eligible dependent that allows him to participate in the plan in the first place. If that is the scenario, and you are inclined to consider his enrollment in error, you could perhaps make an administrative correction back to the start of your plan year. As an error correction, not prospective only, but back to when the "error" was made.

In CA California Family Code section 300 defines marriage as being between a man and a woman. Not possible for a man to be a spouse of another man under CA law. As is currently posted on the Cafeteria Plan board regarding medical reimbursement, federal law would in any event override CA state law as the plan issue is governed by IRS regs. In this case, however, Fed law also defines marriage as between a man and a woman.

Unless it creates a new STD waiting period.... Return to work to go on vacation for 11 days (more pay than STD anyway?) then go back on STD. As an alternative, in writing, ask employer for reasonable exception to policy due to unusual circumstances. Provide a case for exception that is sufficiently narrow (unexpected illenss of X duration occurring from whenever through March such as to prevent planned vacation usage prior to expiration date) so that the employer won't have to worry about creating some sort of blanket exception exception to the policy. I'd guess that exception requests are not uncommon. If nothing works, be thankful there is still a job to go back to...but plan to take future carried over vacation earlier in the year.

Ask your administrator for a copy of your plan document. It should contain the circumstances permitting a change under your particular plan. Generally, a change in care can permit a change in election under the IRS rules. But the rules are permissive to your employer and the employer DO NOT have to be as generous as the IRS might permit. The plan document should provide the details. In those details, you ought to be able to develop a strategy to meet the plan requirements to allow your change. Good luck.

The manager sister needs to start managing! If her company's HR department can't/won't help, ... oh well. Perhps she should look for a new position with a better organization. (I'd hazard a guess that this is not the first challenge that the sister/manager has had with this employee. If there was a good working relationship, an intermittent FMLA should not be the cause of this level of frustration.)

?? What are PERA benefits? Generally, what was the error? Did the employee not understand what they were signing? Did the employee sign up for something they are not eligible for?

Will the person still receive benefits if they only work 8 hours a week, or per month? If you are insured, will your insurance contract(s) permit such loose eligibility? Are you willing to give your worst employee the same deal?

Still in same plan year? What type of payroll system does client use? How does client correct other types of payroll errors? Our payroll system would allow us to correct everything automatically and deal with the taxability issue so that the employee ends up in the same position he would have if no error had been made. If needed, we would advance the employee the amount of the net error and have the employee pay it back over time via payroll deduction. (Time could be 1 pay period, so if our employee is willing to write a check we could just deduct the amount pre-tax in a single lump sum.) Any reason why your client couldn't do the same? Good luck.

In our plan, coverage stops at the end of the month in which you terminate. Benefits are monthly, and changes are only prospective. So if you work 1 day in the month, you have coverage. For this you recieve 100% of any monthly employer contribution (including left over cash) and you pay 100% of any employee contribution from your final paycheck(s). Medical and Dependent Care Reimbursement account deductions stop when payroll stops.

Cha1 - Does the Group contract differentiate between the basic and voluntary programs regarding dividends? I had an older policy that made no distinction, which would allow the dividend to be treated as stated in the above Insurance Code cite. Employer can get ALL of its money back first, then anything left over goes to the benefit of plan participants. Therefore there really aren't any leftover employee contributions (employee money) being refunded until AFTER the employer is fully reimbursed. Is it "fair"? Depends on your perspective, but it is what the law seems to allow, at least in CA. (I am not an ERISA plan so will defer any ERISA considerations to those that are.)

I think GBurns is correct, look to your state codes. Advice of your counsel would be a good idea. In California, it is California Insurance Code Section 10214, which several years ago when I copied this cite read: 10214. If hereafter any dividend is paid or any premium refunded under any policy of group life insurance heretofore or hereafter issued, the excess, if any, of the aggregate dividends or premium refunds under such policy over the aggregate expenditures for insurance under such policy made from funds contributed by the policyholder, or by an employer of insured persons or by union or association to which such insured persons belong, including expenditures made in connection with the administration of such policy, shall be applied by the policyholder for the benefit of such insured employees generally or their dependents or insured members generally or their dependents. For the purpose of this section and at the option of the policyholder, "policy" may include all group life and disability insurance policies of the policyholder. (For governmental employers, CA Government Code Section 53205)

A coworker of mine used to work with a plan that had an eligibility definition that included "...any legally domiciled adult...". The purpose was to skirt the issue of "domestic partners", but in this case the sibling could be a covered dependent if they were the only other adult in the household covered by the employee's plan.

As a HIPAA event, coverage for the baby is retroactive to the date of birth if enrolled within 30 days of birth, so there should be no need for all of the convoluted changes. Generally, a newborn child should be covered automatically under the mother's plan for 30 days so there is time to get all of the enrollment details straight. The only real problem that should occur is if someone misses their 30-day (or 31, or whatever your plans permit) enrollment window. That said, let's take a whack at the situation. Birth 8/20. Mother enrolls child on her plan before 9/1. Mother's plan would "officially" go into effect on 9/1 (even though it is really retro to DOB). But now mom is in the office on 8/31 to cancel the child from her plan. Unless mom has paid premium for 8/20 - 8/31 you could make the case that her election is not yet in effect. It hasn't gone into effect so why wouldn't she be allowed to change it? If mom's coverage is in effect, can still do this if she provides documentation of enrollment in dad's plan. 1st eligibility and enrollment under dad's plan could be considered its own distinct 125 event, though the circumstances make it a little goofy. If done within 30 days of birth, coverage under dad's plan should also be effective on DOB. To be on the safe side, both mom and dad need to read their plan docs to understand what their particular plans permit. It would not be too difficult to construct a scenario by changing a day here or there such that this really gets messed up and the child ends up without any coverage because of some misunderstanding of plan terms. Seek the simplest route that fits within the plan(s) terms, and benefits the employee(s) the most. We run into a related situation occassionally with new hire employees. Sign up for PPO coverage at new employee orientation in the middle of the month, then come screaming in to change their plan because their spouse read the material and didn't like their choice. As long as the election has not gone into effect (that being either payment for coverage, or the coverage itself becoming effective even though actual payment isn't until the next pay period) we will allow a person to modify their election. So if our person is here on 8/30, we would let them fix their election. But if they are here on 9/3, they need to mark their calendar for annual enrollment or document a new qualifying event under our 125 plan. Good luck.

The birth is a qualifying event that ALLOWS the child to be added. It does not require it. If the employee wants to add the child to the spouse's plan, she would simply NOT ADD the child to her own coverage. If she added, but is now changing her mind, this is another story. There would need to be a qualifying event to allow her to drop the child, such as the child becoming eligible (and being enrolled) under the spouse's plan. Then there is the ever faithful, "what does your plan document permit?" 125 sets an outside permissible limit for mid-year changes, your particular plan may be much more restrictive.

I think that your 125 Plan would have to allow it (you can be as liberal or conservative in your plan language as you want as long as you do not exceed 125 parameters), and then your contract with the health carrier would have to permit it. Under our plan, the sibling would not be an eligible dependent under any circumstance.

Yes, we just began offering DP benefits as of 7/1/03. For us, a DP is as defined by Section 297 of the California Family Code (link to codes at www.senate.ca.gov). No employer contribution can be used to purchase DP coverage. Imputed income if the employee already has family coverage and is adding a DP (we have a 2-tier rate structure). Out of 14,000 enrollees, only 11 DP's were added at our special enrollment in May.

If the order is on the Plan and received directly by the Plan, the Plan should comply. If it is a brand new order on the employee and specifies group coverage, the Plan may want, and be able, to comply. If it is an old order on the employee, Annual Enrollment would be the time for this change. If the employee really wants to do this and you can't construct a valid qualifying event, have the employee work with the ex to go back to court for an order that would make the Plan provide the coverage. As an alternative (albeit a VERY BAD alternative) the employee could simply drop the kids from the private plan and wait for the ex to go to court to get the order. Eventually, the kids will be on the Plan. I would work with the employee to figure out how to best make it happen.

If the spouse previously worked full time on a different shift (say night shift), and then switched to part-time day shift (or other same shift as the employee), DCSA enrollment may be OK as this might create an actual need for daycare. (Note: NEED daycare because both parents now working on same shift, notwithstanding whether or not they previously utilized daycare as a convenience.) On the facts presented, however, going PT in order to spend moe time with the kids IS NOT consistent with the requested change to begin DCSA participation. We would deny this mid-year enrollment request.