KIP KRAUS

Christine: If monthly LTD payments aren't eligible to be put into a qualified plan, in my opinion, a lump sum LTD distribution wouldn't be. I guess I'm perplexed at the question.

Diana If you have current retirees that may be adversely affected by switching their coverage to a PPO, I wouldn't advise changing such retiree's coverage. On the other hand, there is no reason why you can't amend your plan to a PPO arrangement for active employees and future retirees. My answer is based on the assumption that you do not have a bargaining agreement which would restrict your options?

Milisa: What is your client doing with regard to an alternative Rx drug reimbursement program? Depending on how big a group they have and how their plan is financed, they may be able to off-set totally droping the Rx plan with verying Rx reimbursement plan designs. This could ease both their premium increase and the effect on plan participants.

RMc: There's a lot of us out here in the same boat. Not a thing you can do that I know of, especially if your money is in a defined benefit pension plan, which it sounds like yours is. These plans have the option of doing lump-sum distributions, but don't have to. Most I've seen don't, because it increases the actuarial cost of the plan.

Its is true that state insurance laws apply in the staet where the group insurance is sited. However, some state insurance mandated coverages applied extrateritorialy to people who reside in a state regardless of where the contract is sited. This is one of the main reasons employers go self-insured when they have employees in a number of states.

Christine: From the insurer's and employer's perspective,the lump-sum reduces calims experience, because they are betting that the lump-sum is going to be less than continued payments. If the employee can afford to take the lump-sum it's a good deal. However, if he/she needs the continued income, taking the lump-sum may not be a good idea. It all gets down to the employee and how he can survive if he takes the lump-sum.

John: I agree with Alan that it may be best to take care of this cituation in a will. In addition,if you haven't already done it, you should checked the distribution section of the plan to see if there are special distribution rules applicable to Minors and Incapacitated Persons. Our plan addresses this cituation and it gives use options as to who we deem payment should go to if beneficiary is a child or incapacitated person. Most plans I've been involved with over the years address this payment issue. By the way. What kind of insurance policy will not allow the participant to name a minor child as beneficiary? Is this a state insurance department regulation? Our employees may name anyone as beneficiary under our group life insurance plan except the Company.

CITARDM: I don't know what kind of medical plan you are offering employees, but if it is an insured plan, usually the insurer will not allow you to have a class of eligible employees that treats employees differently if they are similarly situated employees. For instance, if the eligible class is all full time employees, then you generally cannot keep some employees from enrolling in family coverage. However, there are plans that require married employees' spouses to be enrolled in the spouses medical plan in order to be enrolled in the employee's plan. Unless you have some non-descriminatory reason for disallowing some employees family coverage, you could risk law suits. If your plan is covered by ERISA you can also run the risk of violating ERISA in your eligibility provisions. What is your criteria for letting some have family coverage and others not to have family coverage?

Q&A Section 825.208 essentialy says that an employer has two business days to notify an employee that he is on FMLA upon rceiving knowledge that the employee's leave should be designated as FMLA leave.

John A: Thanks. I suspected that this topic may have been discussed before.

This may be common knowledge, but I've never had this cituation before. Employee was hourly paid and participating in Union Hourly 401(k) plan. He subsequently becomes exempt salaried employee with the same employer and is now only eligible to participate in the Salaried 401(k)Plan. Can he be given the option to roll over his Union 401 account to the Salaried 401 (k)Plan, or is this not permitted by regs.? If not, can we still allow him to borrow from the Union Plan?

The 1,000 hours makes since, but why is the employer trying to keep employees under age 25 out of the plan? Have a lot of young employees???????? If the employer is not funding the plan, it's to his advantage to have employees in the plan just from the stand point of saving on FICA expenses.

Take the company car away, or sell it to the employee. It is not worth the risk of having an employee driving on company business without insurance. If the reason for the employee not being insurable is serious enough, fire the employee. If the fleet insurer doesn't want to insure the employee, he/she is likely a libility risk. Just my opinion.

I agree with you pax. However, it is not uncommon for the fleet insurer to refuse to insure cetain employees that ehty feel are high risk, i.e, too many moving violations. I think most states do have a risk pool for such drivers.

jfgc: We are located in up dtate NY and use Blue Cross Blue Shield as our TPA. We pay $18.55 per person per month for medical claims processing and $1.65 for dental.

Carl: How long had these claims been in the hands of the TPA? I assume that the bills from providers were recieved by the TPA in a timely manner? I've seen hospitals take months to bill in some cases. Reasonable time to process claims that need no follow up information should be maximum five working days. Not sure that independent TPAs are regulated as most insurer/TPAs are, but you may want to check with the state insurance department. A preventative measure for the future might be to purchase a stop-loss contract with a 12/15 payment provision, which pays incurred in contract period paid in contract period plus 3 months. There shouldn't be a three month lag in incured claims in most cases. Hope this helps some.

In my opinion,no. The change in status was not related to the wife having a qualified event.

CDP: It sounds to me like the choice between the high and low option plans is a personal choice based primarily on the employee's knowledge of his/her possible plan usage. In this particular case, it would appear that the employee chose the high option plan because she perhaps wanted the higher maternity benefit or lower out-of-pocket expenses related to cover the maternity period? I can't think of a qualifing event that would warrent a change from high to low option or the other way around. Apparently you have a three tier rate for both medical options (single, two person & family)? If so, then the employee's premium is going to increase regardless of which plan she is in. Unless someone out there can come up with a good reason to think otherwise, I would not allow a change in this situation. The employee knew when she chose her coverage what the consequences were going to be after the baby was born. I say you can't have your cake and eat it to.

TAMMIE: We charge our employees the initial loan fee and the annual loan maintenance fee. We are with Vanguard. The loan initiation fee is $35 and the annual loan maintenance fee is $20. I agree with Carol. It has been my experience that employers charge these fees to plan participants. I have also managed plans that charge the initiation fees to participants and the company pays the annual maintenince fees.

I was thinking more in terms of combining DB Plans with DC plans. Too confusing to plan participants in my opinion there are too many different vaiables. To each his own, I guess. Glad to hear you found a non-confusing way of presenting more than one pension plan in one SPD.

Roxee: Check the e-mail I sent to you.

This doesn't sound like all of the information is here. 1. Did the school not pay the premiums for all employees and the group policy was canceled? 2. I assum the school is big enough not to have to buy individual health policies????? 3. If it is a group policy and they failed to report you to the group insurer they should be able to resolve this with the carrier, because clerical errors usually do not prevent a person from getting coverage that they are entitled to. Give us more information please.

KJohnson: Be careful taking self-insurence advise on a group less than 150. Depending on what underwriter you talk to even if you have three years of claims experienc on the group, the credability factor on the reliability of the claims data can be 75% on 150 lives to as low as 50% on 100 lives. This means predicting future claims liability is difficult. Without at least knowing what your prior experience is you're taking a 50/50 chance that self-insurance would be a better deal. However, you can purchase individual and aggregrate stop-loss insurance to limit your liability, but stop-loss coverage on a small group can be expensive, and typically whatever you spend on it is gone. You get no refunds even if the insurer pays no claims.

I'm no CPA, but the way I read IRC Section 402(g) I deduce that the limit of $10,500 is an individual taxpayer limit. I don't think it applies separately to each 401(k)plan or other qualified plan that a person is contributing to.

It is very possible that an insurer will not provide claims experience on a medical plan that is not experienced rated and under 150 lives. Whether or not they have to provide experience would more than likely be a state insurance department issue, and how the insurer has its small groups filed with them. Contact the state and ask them. You may also want to market the plan with other insurers to test the waters.