Belgarath

Hoo boy, this is stranger than I thought. Basic question - CAN you be covered under an HRA if you are eligible for Medicaid? Logically, it seems like the government would be delighted to have an employer plan pay expenses before the balance, if any, is billed to Medicaid, but I'm not sure of anything at this point! If we assume that you can, and it is just a situation where there is a mix-up error, etc.. For example, provider charge is $2,000. They require 50% up-front payment on everything, so participant writes them a check for $1,000. Insurance company has a $5,000 deductible, so they pay nothing. Provider then sends bill to Medicare/Medicaid, and neglects to tell them that $1,000 already paid, and Medicare/Medicaid pays the provider the full $2,000. In the meantime, the HRA mistakenly pays the provider $1,500, since the HRA doesn't pay until participant pays $500 out of pocket. Provider now has checks in hand of $1,000 from the participant, $2,000 from Medicare/Medicaid, and $1,500 from the HRA. (A great business model if you can get away with it...). Who gets money back? If you are allowed to have Medicare/Medicaid while having an HRA, it would seem that Medicare/Medicaid should be reimbursed $1,500, (cause they are a secondary payer and the HRA pays first?) and the participant should be reimbursed $1,000. This means HRA ultimately pays $1,500, Medicare/Medicaid pays $500, which is the appropriate amount for the provider to receive, and the rest is refunded appropriately. Thanks so much for bearing with me through this preposterous exercise, which is apparently based upon a true story...

Take a look at 1.403(b)-4(c)(3)(ii)(C)(1). Seems to me that this might be a "gray area." Might also depend upon the type of "nursing home" - for example, if it is just an assisted care facility as opposed to a nursing home that only handles people who need complete care, it might make a difference in the determination. A good way of saying, "I don't know." I've rarely found that catch-up provision to be worth much, or to be even reasonably workable from an administrative standpoint, due to the data requirements to make the special catch-up calculation. We have just one plan that uses it, and that was only because they insisted. We always go with just the "regular" catch-up.

Thanks Larry.

Thank you Leevena. I still don't understand, however, why the provider doesn't send back $800 to SOMEONE. The provider has received $1,600 for an $800 service. This can't be right. ??

So, if a company is owned 100% by an ESOP, is there any exception to the excluded stock rule in 1563(c)(2)(A) that would allow (or require) this company to be considered part of a controlled group? It seems like the stock is initially attributed under 414(b), but then disregarded under 1563.

Does Medicaid follow the same rules as Medicare in terms of "Secondary payer" rules? For example, if someone is under a group health plan, (more than 20 employees) also has an HRA, and is ELIGIBLE for Medicaid, and Medicaid pays a provider for something, the group health plan should pay first, then Medicaid? What happens if there is a deductible on the group health plan - let's say $1,000, and the provider charge for services is $800. The employee writes a check for $800, then is reimbursed from the HRA. Now Medicaid or Medicare pays the provider as well. Is the provider obligated to send $800 to Medicare/Medicaid, or does the provider send $800 back to the employer HRA? I really have no idea how these rules work. I believe the provider is required to bill the primary payer before billing Medicare. Then if the primary payer denies all or part of the claim, the provider bills Medicare. Can an HRA even pay you if you are covered by Medicare or Medicaid?

Might depend upon the nature of the correction. For example, without going into all the detail, under the "one to one" correction for an ADP/ACP failure, it is permissible to make a corrective contribution only to people who are employees on a date during the year of correction that is no later than the date of correction. See Rev. Proc. 2016-51, Appendix B, Section 2, .01(1)(b)(iv)(B)(1).

Would this calm your nerves? The plans are maintained simultaneously. There is no language that "pairs" them.

Very nice. Glad you got the result you wanted. I remember some cigarette add when I was a kid - can't remember the name, but the motto was, "We'd rather fight than switch." Looks like the actuaries decided they'd rather switch than fight!

Muchas gracias!

Thanks, I'll try it out next time I do a search.

ESOP - I think you are talking about the special treatment under f(3), and I'm talking about f(2)? So let's say the fully deductible payments of interest and principal is 700,000. This is the level annual payment that was established when the ESOP was started. But due to stock price appreciation, the shares released have a value of 800,000. For 415 purposes only, as I read the regulation I referenced in the original post, 700,000 is the amount that is allocated amongst the participants, not the 800,000 actual value of the stock. Agree/disagree?Aare you saying that f(2) doesn't apply to an S-corporation ESOP?

I'm looking at an S-corp ESOP and a 401(k) - two separate plans, handled by two separate TPA's. The ESOP TPA is saying that there's a 415 violation, and refunds of "X" must be made. I think it is partially true, but I want to make sure I'm not all wet. The allocations under the ESOP, for 415 purposes, are showing as (pick a number - say $800,000) but the repayment of principal and interest on the loan, which is the total contribution, is, say, $700,000. As I read 1.415(c)-1(f)(2), for 415 purposes only, the allocations under the ESOP should be based on the $700,000, not the $800,000. This would reduce, but not eliminate, the 415 violations. As an aside, share prices are higher than before, so can't use the special exception for using devalued shares. Am I missing anything on this?

I prefer the opposite approach, "Once I thought I was wrong, but I was mistaken." No, wait a minute, that's my wife...

And I'm happy to report that the "right click open in new window" approach works perfectly! Wish I hadn't waited so long to ask...thanks again!!

Thanks all. I'll experiment. Mr. Bagwell, we have Internet Explorer as well.

Well put. So if you are a halfwit to start with, and you are half out of your mind, that makes you a quarter-wit, which is the technical term for politician. I wouldn't admit it if I were you... Thanks for the response, it is helpful.

This subject always gives me fits. Suppose a plan is utilizing a basic safe harbor match, and in addition wants to provide a discretionary 100% match on deferrals in excess of 5% up to no more than 8%. So 8% deferral gets you a 7% match. Since deferrals in excess of 6% are being matched, it blows the ACP safe harbor. But do you have to test the ENTIRE match for ACP, or just the match in excess of 4%? I've heard and read different opinions, and it seems that 1.401(m)-2(a)(5)(iv) allows you to choose? The subject ain't as clear as I would like. Would be interested in any opinions. Thanks. (P.S. - this is actually a 403(b) plan, but I put this question in the 401(k) forum, since this is where it always seems to come up)

When I do a search, it comes up with a bunch of results. So I click on one of those results, and read it. When I'm done, how do I get back to the search results? When I hit the "back" button it takes me all the way back to the Forum, and I have to re-enter the search parameter. I'm sure there is a simpler way! Thanks.

Can you rely on the "separate accounting" clause in 1.401(a)-20, Q&A-4? Q-4: What rules apply to a participant who elects a life annuity option under a defined contribution plan not subject to section 412? A-4: If a participant elects at any time (irrespective of the applicable election period defined in section 417(a)(6)) a life annuity option under a defined contribution plan not subject to section 412, the survivor annuity requirements of sections 401(a)(11) and 417 will always thereafter apply to all of the participant's benefits under such plan unless there is a separate accounting of the account balance subject to the election. A plan may allow a participant to elect an annuity option prior to the applicable election period described in section 417(a)(6). If a participant elects an annuity option, the plan must satisfy the applicable written explanation, consent, election, and withdrawal rules of section 417, including waiver of the QJSA within 90 days of the annuity starting date. If a participant selecting such an option dies, the surviving spouse must be able to receive the QPSA benefit described in section 417(c)(2) which is a life annuity, the actuarial equivalent of which is not less than 50 percent of the nonforfeitable account balance (adjusted for loans as described in Q&A 24(d) of this section). The remaining account balance may be paid to a designated nonspouse beneficiary.

Ah - then I go back to my first post. NOOOOO - IMHO it shouldn't be allowed. Only allowable if you do an interim valuation.

Now I'm confused. Why will it significantly affect the assets of the other participants? If the total assets are now $420,000 and his share is 44% (or 184,800) and he receives a distribution of $184,800, how does this diminish the value of the accounts of the other participants? Their accounts should still hold the same number of shares as on 12/31/17, (albeit that they are currently worth much less per share) and when 12/31/2018 rolls around, their share value should be the same as whether this distribution took place or not. It'll be up or down depending upon the total performance for the year. Maybe I'm just missing something.

I respectfully disagree if I'm understanding what you are saying - the fact that the plan PERMITS it doesn't necessarily mean it is ok. IMHO, it would be a gross breach of Fiduciary duty to allow full distribution of a 12/31/17 account value if there has been a big loss in a pooled account plan. To illustrate by way of an absurd example, suppose 12/31/17 total plan assets are 1 million. The share attributable to the owner/Highly Comp/probably Fiduciary is $400,000. Current total asset value due to big losses is $420,000. Do you think it is ok to give the Honcho a $400,000 distribution? I don't.

They like to live dangerously, eh? You could recommend that if they don't like your interpretation, they should try putting it in front of an ERISA attorney. Or possibly an English professor. P.S. If I didn't make it clear, I'm not casting aspersions on YOUR interpretation, but rather their reading of the language. I agree with you, and ETA put it nicely and succinctly.

Hopefully someone who actually knows something about this (and that ain't me) can help you. At this point, I'm only speculating - I'm not certain that there are any specific monetary penalties. I'm guessing that the PBGC wouldn't necessarily issue a notice of noncompliance for one participant in a situation such as you describe, but if they did, then I believe the termination would be nullified, unless the PBGC then "reconsiders" and revokes that noncompliance notice. Hopefully one of the actuaries or other DB experts can give you a good answer.