KIP KRAUS

The first thing that occurs to me is that your money is not physically with the FSA it’s still in your employer’s accounting books. Therefor, if the FSA administrator can’t access it for you you should go strait to your employer and insist that your qualified expenses be honored. This business about one insurer trying to pass the buck to another, which is what it sounds like is bushwa. It also sounds like the prior insurer is confusing FSA claims with fully-insured medical benefits. If your plan is a true FSA then the date you incur charges need only be during the plan year. The access of your FSA money comes directly from your employer so if the new insurer (if they are the FSA administrator) should be able to request reimbursement from your employer. Like everyone else has said, deal with your benefits administrator and not the insurers to get this straitened out.

I don't know for sure , but my opinion is that because it is not used to treat or prevent an illness I wouldn't allow it in any FSA plan I administered.

It hasn't changed.

If your employer is covered, you are covered.

Lisssi I don’t know how sophisticated your friend’s employer is, but typically when a person is laid off and a benefits package goes with it they receive this information in writing. It is not uncommon in a lay off situation for the employer to say that they will pay the cost of COBRA for a period of time. If your friend signed waivers, I’m guessing she must have had something in writing about benefits and pay. The employer would have copies of anything that was put in writing. Have her ask for it.

When I’ve worked with attorneys on DC plan QDROs and they initially come to me saying something to the effect that a certain dollar amount plus interest form a certain date to the dissolution date should be the amount distributed to the AP I ask them to make the calculation and give me a specific dollar amount. It’s usually best to get both parties to the QDRO to agree to a specific dollar amount. We don’t calculate that amount for the AP. It’s worked so far.

Bob, You have a very interesting interpretation of the difference between an FSA and a self-insured medical plan. I can’t say that most people would agree with it, but it’s interesting. I don’t know of anybody who would refer to a Section 105 plan as an indemnity plan. Doesn’t a PPO or HMO come under the purview of Section 105? A self-insured medical plan can be designed to resemble an HMO or a PPO, a FSA wouldn’t be. I think Section 105(h) applies to amounts of benefits paid to HCEs, but I could be wrong A self-insured medical plan can refuse to pay for certain medical procedures where as an FSA will follow the reimbursable items under Section 125 and other regulations promulgated thereunder. It will also often times limit certain benefits to a maximum dollar payment, which will have nothing to do with how much an employee contributes to the plan. FSA payments are typically limited only to the amount of an employee’s contributions unless the employer is also contributing monies to his account. A self-insured plan will use underwriting procedures to determine the employer’s expected liabilities and determine employee contributions, and COBRA premiums among other things. I’ve never heard of an FSA doing this. By the way, the amount of money an employee contributes to a self-insured medical plan has nothing to do with the concept of the use-it-or-loose-it rules. If that were the case, you could say that paying premiums for any insurance, including auto insurance is a use-it-or-loose-it proposition. This of course would be a matter of semantics. A self-insured medical plan will often purchase stop-loss insurance. I don’t think an FSA would, but nothing would surprise me these days with what an insurance company would try to sell.. A self-insured plan, if administered by an insurance company may offer a conversion medical policy upon termination of COBRA, but there is no such thing for an FSA. There are so many other differences between a FSA and a self-insured medical plan that it would take too long to enumerate them on this message board, and without giving everyone a plan design and underwriting lesson I don’t think there is a matter of semantics at all, but a matter of significant differences.

Very funny MoJo, but I don’t think one would have to be nasty about refusing to comply with the order. Simply put, you tell the judge that it would be a violation under ERISA for you to comply with the order.

Charlie: I’m not an attorney, but what you say makes sense. It’s always been my understanding that compliance with the Mental Health Parity Act is the employer’s responsibility, as is COBRA. Just a layman’s thought, but if the employer could demonstrate that he requested the HMO to comply with the MHPA might not the HMO be responsible for non-compliance? Don’t know the answer to your last question and can’t even venture a guess.

I agree with everything RCK has mentioned. In addition, when you submit your request for the SPD you may want to request the appropriate distribution paperwork and complete it again. I wouldn’t trust that your original paperwork is still in their hands. If you don’t get satisfaction after going through this process you may want to consider contacting the local Department Of Labor and see what they may offer in the way of assistance. In fact, you may want to contact them immediately.

MES: I’m not an attorney, but I love this one. If a QDRO can’t force a plan to provide benefits that are not normally provided by the plan I would apply the same logic in this case. Right or wrong I just wanted to put my two cents in. If this one goes down we might as well not have ERISA or IRS regulations.

Charlie: It would be pretty difficult for an employer to comply with the Mental Health Parity Act if HMOs didn’t offer the coverage. I would think you could find out from the state Insurance Commission if HMOs are required to comply.

I agree with Benefits Maven. The definition of compensation determines the inclusion in 401(k) income. When you go from an insured STD plan to a self-insured (or salary continuation) plan you need to know if the 401(k) plan determines the STD/salary continuation dollars as compensation eligible for 401(k) contributions and match. I have administered a self-insured STD plan, which was very rich in benefits and we deducted 401(k) and all other normal deductions. We do not include insured STD (third pay) as eligible compensation in our 401(k) plan.

It might be time to look for another insurer. Unless you are a really small gruop, say under 100 covered employees I'd think you could get a carrier with a more flexable benfits design. On the other hand, I know that insurers who insure small groups sometimes have to file their plan designs with the state and don't have the flexability to vary from those filed plan designs.

Is the accountant saying to include the cost as imputed income? I’d want to see the IRS reg. Before I’d agree with that theory. Have the employees get the IRS site for their accountant’s theory. Of course the other thing that you may want to tell these two employees is that if you do it for them you'll have to do it for everyone, and everyone may not want it done this way. Unlees they are planning on being totally disabled soon, I don't think it's a good deal to pay extrs taxes just in case.

Let me see if I have this right. My employer for instance pays about $250 a year in premiums for my LTD coverage and then pays me $250 in income, right? So my employer is going to match my FICA and pay unemployment insurance premiums on this additional $250 in income to me. Sounds like a bad deal for the employer to me. However, if this does happen how does one identify the payment to me as payment for the LTD premium? How does the employer account for the premium if he is giving it back? If the employees are that concerned with the taxability of the premiums make the plan totally contributory and gross everyone up for the premiums. This I could see provided the employer wants to be that generous.

That's interesting. When does a state ever mandate less benefits? Do you know of a specific one?

Carolyn: You hit the nail on the head. Employees don’t bother reading their SPDs. Isn’t it amazing how we have to baby sit the flighty and irresponsible? I’m sure there were other mitigating circumstances that prevented the employee from getting his claims in within the 60-day period too. Don’t know what the chances are that leniency in this situation would ever be caught in an IRS audit, but if it were I I’d go ahead and extend the extra time just to keep peace. Even though it would irritate me to no end. I would also ask him for information from his previuos employer that indicates they had a 90-day period. Not my advise to do it,just what I'd do for all you legal beagles out there who don't like me giving advise.

I agree with kristina. They will be looking for final returns for the individual plans so you should file them.

I’ve never had an entire 5500 rejected by the IRS or DOL. Both have asked for certain items to be checked off that were inadvertently missed. Must have been some major errors for them to reject the entire filing. As everyone else has said, I think you could argue that there is no obligation to revise a SAR if no material items in it are being changed resulting from the revised filling. On the other hand, if the cost to issue a revised one isn’t prohibitive why not just do it and indicate that it is a corrected SAR?

What special circumstances?

kredlin: If the plan is self-insured it can determine who is covered as a dependent. Even if it is insured I don't think a state insurance department can force an employer to cover grandchildren even if the covered employee is legal gardian.

Just my guess, but I don’t know how a foreign pension plan not established under our tax code can qualify as a rollover vehicle. How does the IRS know when this money is eventually distributed and how do they control the payment of US taxes on an eventual distribution?

While I will agree with Steve. However, there are circumstances that could require the bill to be submitted to the medical plan provided there is a medical plan. If, for example the medical plan has front-end deductibles the claim should be processed by the medical plan for refusal and the FSA can then pay from the EOB. In addition, unless the FSA administrator knows that the charges are not reimbursable under the medical plan then an EOB denying the charges should be submitted to the FSA plan. I could see a situation where a person might double dip by submitting a bill only because they could get reimbursement from the FSA and turn around and submit the same bill to the medical plan. Maybe unlikely, but probable. Having said all of this, if one feels comfortable with relying on third party confirmation and the participant’s statement then go for it.

In my opinion the company is right. However, right or wrong I can understand why they don't pay your deductible.