KIP KRAUS

I agree with k man. Just taking the employee's word that the withdrawal is for a qualified hardship to me is not enough. Get a signed purchase offer for the land and DW. In addition, I still contend that evidence should be provided that a WD can be put on the property in question.

Just a few thoughts. What assurance is there that this person will buy the double wide? Is there a purchase agreement for both the land and the DW? Does anyone know if he/she will be allowed by ordinance to put a DW on this Property? I would think the Administrator would want some assurance that this will all happen. By the way, how long would the person have before purchasing the DW?

Just thinking out loud here, but if employees have no say in what they are paying for their benefits to begin with wouldn't it seem that if an employer forced an increase in premiums upon them that they could have an increase in cost allowed under Section 125?

Just a suggestion. Have you talked to the person who sent the rejection notice? He/she should be able to explain exactely why the 5500 was rejected. I'm also confused, not hard to do sometimes. 1997 5500's were filed with the IRS. How did the DOL get involved in rejecting the 5500 filing?

It would seem to me that if the UK division employees are not eligible to participate in the 401(k) plan and a U.S. citizen goes to work for such division, and is paid solely by the UK division then he/she would be ineligible to participate. As Jon says if there is no U.S. income, how could this person participate? In one of my former positions, we had U.S. employees that we sent to the UK to work for our parent company. We paid a portion of their salary from the U.S. and the other portion was paid by the UK. We allowed 401(k) participation and deferrals from the U.S. salary only. Right or wrong, that’s what we were advised to do.

Where is the COBRA qualifying event? I'm not sure that dropping a medical plan option results in a qualifying event especially if there will be no prex in the PPO plan, and medical coverage will be continuous??

I agree with dsilver, and in my opinion if these temps. meet any of the dentist's eligiblity rules for benefits, they should be put on the benfits, unless temps. are specifically excluded. It sounds like the temp. agency has already figured out how to avoid any responsibilities to provide benefits to people they place with employers.

Well, it sounds like you're between a rock and a hard place. Been there, seen it before. The good ol boy dealing with the owner syndrome id hard to overcome. Even if you can find a more competitive TPA with better stop loss premiums, my guess is that the current TPA will find a miraculous way to under cut the quoted rates, because they probably could do it today. If you dare get competitive quotes, you could alienate the owner. The owner may not realize that his buddy is not so competitive after all, but may not want to be told that. Be careful how you proceed.

I agree with R Butler. My advise, don't rock the boat. Unless you are putting all of your money in a guaranteed account 4 or 5 days for the next 20 years won't mean beans in lost or earned income on your investments.

Jfgc: My understanding of a 12/12 SL policy is that only claims incurred in the 12-month period are paid in the 12- month period, and when the contract ends nothing more is paid by the insurer, essentially you pay the run out. There simply is no carry over of incurred claims like in your 12/15 policy. I have a few questions. Have you thought about increasing the individual and aggregate stop loss amounts? $50,000 and $100,000 seem like very low risks on a group that should have 100% claims credibility such as your group. Is your TPA getting the commissions on the stop loss coverage? Why is the TPA making your decision for you regarding stop loss contracts? Seems awfully odd that a TPA is forcing such an issue.

Damien: As you can see, the more conversation generated by your question the more complicated the issue becomes. Just to bring up another issue, if the employer is charging employees for coverage and doing so via a Section 125 plan, how do they justify moving a person from one plan to another without there being a qualified event? On your question regarding any problems with you continuing to be the TPA, I'm not an attorney, so I can't give you any advise in this area. However, if I were you I'd contact an attorney. In addition,I see no advantage to the employer in doing what he is doing unless he thinks he will not have to pay the full-insured plan insurer(s) for adverse claims experience. NAC and Jeanine both bring up excellent issues that need to be concidered.

Damien: I’m not sure I understand what the rational of doing what you suggest is. Doesn’t the full-insured plan. Doesn’t the fully-insured plan charge the employer for claims up to a stop loss amount? Where are the savings? In my opinion, if the full-insured plan is a pooled or community rated plan, and the insurer finds out what’s going on they will cancel immediately. Based on the information you have provided it’s difficult to even see any advantage in what the employer wants to do, unless the employer is trying to scam the insurer.

Damien: Since self-funded medical plans typically do not have to comply with state mandated benefits, substance abuse and psych. benefits can differ tremendously from plan to plan. If the plan you refer to wants to change benefit maximums in the middle of the plan year it seems perfectly permissible to me. However, if a person is undergoing inpatient care prior to the mid-year change I believe that patient should continue to receive benefits under the old $10,000 maximum if the new 15-day limit goes into effect during his/her treatment. Once this person returns to active work, for any further treatment for the remainder of the plan year I would apply the greater of $10,000 or 15 days. On the other hand, for a person who may have had inpatient coverage under the older $10,000 limit, and returned to work prior to the change to the 15-day limit, I would apply the lessor of $10,000 or 15 days for any further treatment for the remainder of the plan year. I'm not sure that there are any legal guidelines covering this situation. However, this type of situations under an insured medical plan are typically mandated by the insurer and possibly state insurance regulations.

MJM: I haven't seen anything in the regs that say who is entitled to the 2%. As far as I know, the regs simply say that the health plans can charge the additional 2%. However, I do know that some insurers will keep the 2% for their fee for billing COBRA participants. On the other hand, if the employer is having COBRA participants pay them directly, then the employer is keeping the 2%, because COBRA participants simply stay on the group billing at the group rate. Some plans separate the COBRA participants from their normal group billing, but they are still billed by the insurer for the group rate. I have never heard of an insurer adding an additional 2% on top of the COBRA 2% for adverse selection. I would think this practice would be a violation of COBRA and state regulations. In fact, if the medical plan is fully experienced rated, whether self-insured or insured, it wouldn't make any difference to the insurer with regard to adverse experience because the plan absorbs the claims experience.

In my opinion, you need only check the COB provisions of both plans. If both plans consider the plan in effect the longest as primary (most plans do use this method) then the plan in effect the longest would be primary. Hire date shouldn't have anything to do with how long coverage is in effect. The effective date of coverage should rule. Self-insured or insured shouldn't make any difference in how COB is determined. However, the self-insured plan could have some twist to its COB provision that may be different than the fully insured plan's. That's why I say you need to know what each plan's COB says. I don't know what being a non-federal government entity means or what it would have to do with this cituation?

Thank you one and all for your helpful comments and suggestions. I have contacted our legal advisors for their opinion as well. Gee, who would have thought that all of the intentional abuse of union pension funds in the 60's and 70's would have caused employers so much grief for an honest mistake and a full willingness to rectify it.

I thought This topic had been discussed before, but I can't find it anywhere. Until discovered last week by our independent auditors, we were unaware that one weeks worth of employee payroll deductions to the 401(k) plan had not been forwarded to the plan trustee in a timely manner. We have since forwarded the initial deducted amounts to the trustee. We know that we must now remit lost earnings on these funds and are in the process of doing so. We have been told that the earnings can be based on the most favorable fund performance of the Plan fund options during the delenquent period. Does this mean that we simply calculate the year-to-date earnings from the date the funds would have normally been deposited to the date we remit the additional earnings? Is there any guidance out there that would tell us what dates should be used to do the calculations? The additional amount is small and not an issue for the company we just want to do the right thing to remedy the error. Are we automatically going to be required to file a form 5330 and pay excise taxes because of this administrative error?

Are all exempt employees HCEs? If so, I'd agree with PJK. If not, you may need to include HCEs in your testing as jlcowden suggests. If all exempt employees are not HCEs it seems odd to me that you would use a classification of HCEs as a group who do not have to contribute to the medical plan. This all being said, If HCEs have no contribution, then they must, by definition, be excluded from the POP so why include them in testing?

How do you design a bonus plan for non-exempt employees without having to include the bonus payments as part of their regular pay as required by the FLSA?

MWedell: Thanks for your answer to my first question. I thought as much, but couldn't find a difinate answer. Any body want to tackle my second question?

Dan NMHC: Why can't You have an Rx card with percentage co-payments and still negotiate the PBM discounts? I like the three tier % payment idea. I contend that if you design the plan this way you can still have an Rx card and avail yourself of the PBM discounts. I could see a plan paying scrips at 90%/70%/25% with a separate maxim out-of-pocket limit on the Rx plan from the medical plan. Until drug companies are forced into being more competative they will continue to increase the prices of drugs and their high profits. If employees continue to be sheltered from the real cost of drugs, they will continue to demand the newest drugs whether or not the new drugs are infact better than the old drugs. Think about this. There are more than 18 antidepressant drugs on the market, which of the more than 5 highest priced ones is the miracle drug that works better than the 14 or so lower priced ones? Does winning and dinnig the doctors and advertising expense make them better? Maybe so. One last thought. If the FTC continues to allow pharmaceutical companies to merge into mega-pharmaceutical companies drug prices will only get worse. Maybe the over 190 drug and medical device company lobbiests have something to do with this. Just guessing.

Two questions regarding hardship withdrawals under the safe harbor withdrawal provisions. One: Can the administrator, in his sole discretion allow a hardship withdrawal without requiring the participant to first exhaust his plan loan options? Any precedent? Two: If the plan forgot to stop employee voluntary payroll deductions when the hardship check was issued how should this be rectified? The participant received the distribution in December 1999, the end of the 99 plan year, and is still contributing. Can we stop contributions now and start the 12-month period? Any precedent?

Dan: The three tier drug plans are already being semi-mandated by the HMOs in upstate NY. However, their plans are still using co-payments such as $5/$15/$30 or $10/$20/$35 for the different tier drugs. My suggestion would be to have the 3 tiers, but use % payments such as 90%/75%/50% then you will see some people being more discriminating in their purchase of generics or second tier drugs rather than the high price spread. Who knows, it might even cause some concern among the drug companies, but I doubt it. Of course I could get started on the drug companies and how they continue to to have the some of the highest profit margines in American industry, while continuing to gouge the American health care consumer. But I don't want to hurt anyones feelings.

SCM, Check this us treasury site otu. It lists items that can be deducted and talks about transpertations expenses. http://www.irs.ustreas.gov/prod/forms_pubs/pubs/p50207.htm

Kurt, In my opinion, if the plan is offered to part-time employees and they refuse to enroll when eligible I would say they would be subject to any applicable pre-existing medical restriction limitations allowable under HIPAA. The mere fact that part-time employees pay more for their coverage, in my opinion does not exempt them from any of the plan provisions for late enrollment. If, on the other hand, they do not participate during that first 12 months because they have coverage elsewhere, then we are of course talking about a different HIPAA situation, and I assume that you are not talking about this type of situation.