Greg Judd

I may be missing something, but substantive misrepresentation is actionable in most contractual situations. I'd say the employees' intentional misrepresentation of identity, as a ruse to obtain the job in the first place, does indeed change the employment relationship, & could be argued to change the employment relationship.

The nub of it is that stop loss protects the sponsor, rather than the plan.

Hi Kip, Not such a stretch in some communities, where blood relationships of "uncles" & "aunts" etc are not always well-documented....

I had the same thought, but the matter roused my curiosity. Here's what I found in the handy-dandy Section 125 Q&A here at benefitslink: ...while a POP is not a separate ERISA plan, it is ERISA covered because of the type of benefits offered to employees on a pre-tax basis (see ERISA Opinion Letter No. 96-12A). Click here to go to that QA - #60.

Did some work for a huge East Coast firm that did permit employees to cover other-than-traditional spouse/kids dependents, per bargaining agreement. It was a vestige of their rate-regulated past, tho they'd continued the practice into their brave new less-regulated biz environment. Costly.

My firm provides compliance information from the 5500 series, a la freeerisa.com. The latest available stuff that anyone has is from plan years beginning in 1998. So, there may be filings available for them, but none beyond 1998.

David, hope you didn't pay more than a few hundred for this work. You're describing a fairly simple, tho narrow-purpose, database application.

Uhh, lets see: 1) Figure the latest cost of the coverage. 2) Compare it with whatever your projections/latest notice of premium increases may be. 3) Then, the amount you may introduce contributions at/raise contributions to becomes the difference between former & upcoming cost. 4) Make changes at the appropriate date: start of your budget cycle, or the date your premium increase takes effect, or other appropriate start point. Economics-challenged judicial "opinions" (read: delirium) aside, this is one way to demonstrate the organization has not reduced its commitment to 'maintaining' the benefit: it hasn't chosen to pay less for the benefits, and hasn't (necessarily) eliminated any items that might be paid for. It's just my personal opinion, but I'd be inclined to move from any jurisdiction in which such legal eagles were elevated to the bench. I'm starting to sound like a flack for Kaiser Family Foundation, but their free annual Employer Health Benefits survey does a great job of providing info useful when addressing questions like this: Click here for links to the survey & its components (Acrobat documents).

Second that. I'm starting to sound like a flack for Kaiser Family Foundation, but their annual Employer Health Benefits survey does a great job of providing info useful when addressing questions like this: Click here for links to the survey & its components (Acrobat documents).

Help us out a bit with "non-title 403(B) plan". What might that mean?

Hey, Dave, that you ? Seriously, BenefitsLink is the "benefits on the internet" cheese, by most metrics. Contact the webmaster for the details.

Laffffin! TF, my impression is that Mssrs. Ferrigno & Bitzer are getting at similar issues, maybe from a different angle, that IRC is--namely, there's plan sponsors, there's plans, there's trusts, there's employers, there's employees.... a bunch of 'entities', some of which may wear different hats while wearing the same pair of shoes [my, it's crowded in there!]. Who owns what depends on the intent of the parties involved, & that as we've already covered can get difficult to determine precisely if the parties didn't explicitly address whatever issue we happen to be interested in at the moment--in this case, premium refunds. Kirk makes a very good point about the practical consequences of taking an employer-centric line in the absence of any documentable intent to do so in advance of the issue arising: it seems doubtful it would get much sympathy from inquiring employees or authorities.

Thanks IRC for smacking me upside the head, accuracy wise. TF, what s/he said, nb especially the trust/plan distinction.

Well, yes...but. I'd caution you not to automatically equate the plan with the plan sponsor. If your role is to make decisions on behalf of the plan, it's a meaningful distinction. Once premiums are paid on the plan's behalf, the $ are the plan's; whether any/some/all of it returns to the plan sponsor's hands depends on factors such as we've kicked around previously, such as what the plan docs say, past practice, etc.

Aye, there's the rub. Your plan is not what many would regard as 'self-funded'; rather it's a participating arrangement, in the sense that your organization participates, or shares, with your insurer the good--or bad--financial ramifications of your group's claims experience for the year, at the end of your plan's year a) recouping any excess of premium over claims at year end, as you have in the year you've described, or b) making up the shortfall of premiums vs claims, either in the form of higher premiums in the ensuing year or via a cash payment at year end. Had your plan experienced b), you probably wouldn't have passed the hat among employees for a share of the difference. The organization bears the risk of such a year; contributions are required from employees as a condition for plan participation, regardless the claims the plan may incur during the year. Employee contributions, once made, do become plan assets, so it's important to check what the plan says, if anything, about disbursement of assets that might be construed to be a mix of employer & employee monies. Ideally, the plan spells out how surpluses are handled, & it may (subject to state insurance law/reg constraints) ok handing all surpluses back to the sponsoring organization. If it's silent, or vague, the plan's decisionmakers obviously have a tougher job to do. In short, my opinion based on what you've described is somewhere between Kip's & Kirk's: the excess is the organization's, IF the plan language is silent, the plan's practice has been to return surpluses to the employer, and there's no contravening state law/regs governing how excesses are divvied up. Simple, right? Unfavorable tax treatment of any such refund is a deterrent for many organizations (reduces the premium deductible as an ordinary biz expense), but this may not impact your organization. Also, refunds are sometimes used to create premium stabilization reserves, which can be used to moderate the impact of premium increases in ensuing years. Insurers don't pay the greatest rates on such reserves, & reserve must meet IRC code standards for a "welfare benefit fund" (Section 419 IRC I believe). All that said, depending on the number of years your organization's been in existence, the number of employees in the plan (I'm guessing 2 to 3 hundred), whether the year you described is representative of your plan's experience, and the reliability of your cash flow, your organization may want to explore other funding arrangements--or at least an adjustment of the 'pooling points' (the $ thresholds at which your group members' claims are no longer counted towards your group's participation in year-end surplus/deficit) that give your organization the use of that excess cash during your year. $1 million's a lot of dough to hand over--did you say all at the beginning of the plan year? to an insurance company (or broker/other plan representative?), if your group's claims experience is similar to the good year you've just had, year in and year out. Basically, someone else has had use of a lot of the organization's money for that period, which wasn't needed for the group's health care tab. If year-end surpluses are consistently generous, it may be good for someone(s) other than the organization and/or the covered employees. A 'rule of thumb' underwriting margin (a 'fudge factor' for projected claims+expenses) for a group of under 250 is 10-15% of premium; it generally declines, the larger the group. Consistent 30% surpluses would indicate someone needs to sharpen their projection pencil. And we haven't even gotten into the potentially negative employee reaction to news (formal or informal) that the organization intends to pocket that surplus.... Good luck with it!

Little extra info please. Is this a multiple employer arrangement? Sounds like it but not specified. Otherwise, the "amount in excess of claims (plus expenses, I'm presuming)" part throws me. There wouldn't be any reason for an organization to put more into a self-funded arrangement than is needed for claims as they arise; so unless there are multiple employers putting in some formula-driven amounts over time, there'd be no 'excess'. So I know I'm missing something here. Thanks for bearing with me.

Erin, COBRA's connected to your former employer's health benefits--if your employer a) had health benefits & b) fell under federal regs concerning offering continued health benefits. If you've just recently become unemployed, had health benefits while you were employed, & your employer had over 20 employees, contact your employer about your COBRA rights. They should supply you with info automatically, but stuff happens sometimes. Good luck.

Sounds like you have some well-defined goals for a) how many employees you need/want to make the investment you've outlined & b) how much you need/want them to invest. It sounds like you're bent on needing/having employees buy & hold x amount of company stock for y period, with z minimum total stock held by the plan. If there's any way to share that info, maybe some here can zero in on the 'details' you're after. But if by 'details' you mean 'tricks', or 'gimmicks', you're facing a particularly tough 'incenting' job.

Is the 'guarantee' then more in the nature of a target than a pledge? Does the plan/company carry some kind of insurance in anticipation of the event you describe?

Much much better. Yours isn't the garden variety 401k, to put it mildly, but in the context you've described it's clear some sharp minds have been at work. Based on your description of the plan, & the location you've provided in your profile, I might even hazard a guess at the company - but won't here. Now that you've done the hard work, I'll add my easy suggestion; place your 'sale' of the 401k in the same context you have here--its role in employees' overall financial reward from your firm. The history's helpful, the guarantee's helpful, the other legs of the financial stool are helpful to employee understanding. I'm sold based on your description alone - where do I sign up?

Looks like the consensus here is 'if you must proceed, do so with caution'; yet our colleague Kevin seems ready to tie a millstone made of company stock certificates around his neck. Kevin, can you elaborate on your firm's enthusiasm for this idea?

I'm with John A on raising the auto enrollment figure. Your evidence suggests inertia is the strongest force at work - so work with it. 7%+ may be too high, but how about doubling to 2%? Or raising to the organization avg+ 1%? Enrollees still have the opt out window to permit their action. My hunch is that benefit election inertia is overwhelmingly the rule, even where there's evidence of competent educational efforts. Maybe a subject for a separate thread?

Seconding Kirk's reply, Yvonne. We've seen some mighty creative filing habits for welfare plans....

I'm with Erik re: probable causes for the change in value, based on your post. That said, it's a matter of "there they go again...". Employers blithely & frequently 'forget' that these are employee benefit plans, & that regardless the dollar impact of any changes that take place, how they communicate change imbues - or obliterates - value as well.

This Benefitslink reference may save you a bunch of clicking & pecking. Looks like DOL's looking for both SPD distribution and a separate initial notice (a few paragraphs into the linked article).