KIP KRAUS

I agree with Akuykend. It is not uncommon for an employer to request a contribution from employees for single coverage. Even though the employer is not changing the cost for employees who already have family coverage doesn’t mean he is discriminating in favor of the married employee. If it was explained the way you say, at the very least it was a poor choice of words to explain it that way. It should have been explained that single coverage is going to cost “X”, and family coverage is going to cost “X”, which will not result in an increase for persons already covered under a family plan.

Wouldn't the premiums paid on behalf of the HCEs be taxable income as well as the income taxes on any benfits recieved?

Except for the five states that require statutory STD benefits I would say that a case could be made for providing different levels of benefits to employees residing in different states or cities based on the norm for the area in which they reside. Even in the statutory states one can provide a higher level of benfits than those mandated. The only thing I would consider when providing different levels of STD benefits is that it doesn’t discriminate in favor of the HCEs, or discriminate against females. This is just my opinion, but I’ve never heard of any specific legislation that would restrict offering different levels of STD benefits.

I would agree with you if the company is self-insured and were so inclined to give credit for deductibles paid under a prior employer’s plan. The problem may be however; finding out what deductibles the employees had paid under the other plan. That type of information may be hard to get from the other insurer, if so the employees may not be able to come up with their EOBs to prove they have met any deductibles. If the plan is fully insured the insurer may or may not allow you to give credit under another employer’s plan. If, however, they look at it as taking over another group insurer’s business and there are no-loss-no-gain laws in the state they may have to give credit for the other plan’s deductibles. Having said all of this, at the very least, the employer may want to credit the prior plan deductibles just for good employee relations. Does this make any sense? It could be more complicated, but the bottom line as I see it good employee relations to do it if possible.

I guess I’m a little confused, but that’s not uncommon these days. In 25 years I haven’t heard of one case where a person was overly concerned with the quality of care they received from their dentist. This of course doesn’t mean that dissatisfaction doesn’t occur. If you give employees the choice to use any dentists they wish to use you’ve done your job. Participating in an HMO dental network in my opinion isn’t going to necessarily going to guarantee quality care. In my opinion the only reason to participate in an HMO dental network is to avail ones self of the discounted rates charged by the dentists. If the employees use these participants they save on their co-payments and the employer saves on claims payments. As to self-insured versus fully insured I say you can have the best of both worlds by self-insuring and having an HMO process claims and allow you to use their network. By the way, there may also be other TPAs in your area that have dental networks. My philosophy is that if your dental plan covers 200 or more employees you self-insure it and have a qualified TPA/HMO adjudicate claims for a fee.

I agree with Sandra that on the surface a divorce would not necessarily be a reason for a person to increase her medical contributions to a FSA. However, if she had been covered under her employer’s medical plan as primary and under her former husband’s medical plan as secondary a case could be made for her to increase her FSA contributions.

I don’t know the details of your prior marriage, but typically if you didn’t sign off relinquishing your beneficiary rights you were more than likely automatically by law his beneficiary while married. I don’t know how you were not the beneficiary. How long were you married to him? After your divorce of course he can change the beneficiary at will provide he’s not remarried. I’m not sure what you are attempting to do, but unless you negotiated a portion of your ex-husband’s 401(k) money in your divorce decree I’m not sure what it is you want. Contact your divorce lawyer.

In the past I have had benefits attorneys advise me that when you do something within a formal severance plan that is over and above the plan requirements you essentially are amending the plan and setting a new benefit level. I certainly wouldn’t want the current laid off employees to find out about it. My advise, get legal advise.

Then I guess that’s what I was referring to. So if state law didn’t allow the 2% admin. fee doesn’t that mean you follow the state law?

Thanks RB. I’m not sure exactly what a “Cure period” is, but our loan document seems to allow a person to restart their loan payments via payroll deduction before the loan defaults provided the accumulated interest from the stop date to the start date is paid immediately.

Kirk: I originally thought that as well, but it seems to me that I read some where that if state continuation of coverage laws were more favorable than COBRA law an employer was required to follow the state law. Of course one would want to know how the state applies its regulations to contracts sitesed in their state or to employees residing in their state.

Employee bumps another employee to prevent being laid off. As a result of the bump he loses $5 per hour. He has two out standing 401(k) loans, and now wants to stop having payroll deductions taken out to repay these loans. I know a loan will be deemed to be a distribution if not paid. My questions are: 1. Can we allow him to stop making his payroll deductions to pay off these loans? 2. If we can and before the loan is defaulted, let’s say in 3 weeks he decides he wants to continue to make payments do we allow it? If we do does he have to make the back payments to catch up? I say No, but who knows for sure. I think this may have been discussed in the past, but I’m not sure.

Employee benefit plans must operated in a manner that precludes individual selection. I say absolutely not.

I’ve never been involved in the purchase of an agency before, but what I know from working as benefits consultant/broker out of a primarily P&C agency I’d want to know more about the income generated from renewals and what the P&C bonuses are. It’s been a while since I’ve been a broker, but group insurance commissions varied by insurer and first year commissions usually were higher than renewal commissions. However, some types of coverages such disability coverage can be level for the life of the contract. I don’t know that much about P&C coverages but it’s my understanding that they are typically level premiums, and if I’m not mistaken P&C carriers give agencies bonuses, or profit sharing dollars at year end based on the volume of business placed with them. My advise, have a CPA review the books. You clearly need to know the commission income and what amount of that commission level is going to continue if the policies remain in force. Another major factor I would look at is what loyalty will the existing clients have to you if the current owner is not involved in the business. Tons of insurance is sold through the good-ole-boy network, and once that network ceases loyalty can be directed elsewhere.

We did a split between exempt and non-exempt at one place I worked. The exempts paid a higher percentage than the non-exempts, but like Kirk says I've heard of the same arrangement and have always been a proponent of such a deductible arrangement based on income. However, such a plan can be hard to administer unless you put people on earnings brackets.

If you find someone to do it I'd be interested in what assumptions they use to underwrite it. I suspect that the premiums would be more than the risk of taking the chance that somone leaves the firm owing.

Who is going to fund the difference between the real rate and the discounted rate, and what are the tax effects to the employee? Is this legal in the state where you reside? Why is your company thinking about doing this, is it hard to find qualified employees, or hard to hold on to the qualified employees? If an employee can come to work get the discounted mortgage, leave the company and keep the discounted rate, why wouldn't they? I don't believe there's that much loyalty by employees who are mobile. By the way, I heard this morning thast 30 year mortgage rates are at 6 1/2%, which are the lowest in 20 years i think they said.

So does Vanguard.

The answer is yes you have to account for it separately. The participant's account statement will show the total account balance and the amount vested. However, Herigstad makes a good point.

I agree with Stephen. That is the standard way of computing a matching account. You may want to think of it in this manner, if you don’t own the assets that are generating the income why should you own the income generated by the assets?

I’m not an accountant, but it would seem to me that there are more issues here than running the payment through the cafeteria plan. And I assume that what you mean by running it through the cafeteria plan is that you mean you allow employees to pay premiums on a pre-tax basis? If so, I assume also that an employee may pay premiums on a before tax basis as well. How is Company A going to treat the payment to the plan from the employee’s former company? How is the employee going to treat the payment from his other company, taxable income? It sounds to me like he wants to get free nontaxable benefits using taxable income for which he doesn't want to pay taxes. Even though the former company is paying the premiums, because there is no longer an employer/employee relationship I would argue that such a payment would be considered income to the employee. My solution, tell this employee to make arrangements with his former company to pay him directly and then have his premiums deducted from his paycheck. Let him worry about the tax consequences if there are any. Why should the company get involved in his personal business? I may be totally off base, but I smell a rat.

I say you are absolutely correct.

Rule of thumb, if it doesn’t treat a medical condition it isn’t a covered expense. However, having hair could loosely be associated with some kind of psychoses.

Doctors can write prescriptions all day long for OTC medications, but they don't qualify for FSAs or tax deductions. First of all you don't need a prescription for OTC medications. I don't think Recommendations by doctors are prescriptions.

As far as I know OTC drugs are never covered under a FSA or on your tax return regardless of the doctor's recommendation. As to taking the additional deductions on your tax return, I'm not sure. However, it makes sense to me that you could.