mroberts

you posted on this topic a few weeks back. as indicated, it makes more sense to set up the section 125 on the same cycle as the medical plan. otherwise you're going to run into problems when medical insurance rates go up 20% or you start changing deductibles and co-insurance percentages mid-year and employees have to wait until january to make a change. i know section 125 regs allow for changes due to "significant" cost increases, however, this needs to be looked at by a case by case basis. if an employee is paying 30% of the cost for his medical insurance, i don't think a 20% increase would be considered significant since it's really only a 6% increase to the employee. every one has a different opinion on what significant means, but my opinion is that it is TRULY significant, not $12 per month.

My source is just about every insurance contract ever written.

I don't really follow the events that you listed, nonetheless, changes due to a qualifying event need to be made within 31 days of that event. Therefore, it doesn't look like you're going to be able to do anything.

The most important thing of any medical plan, besides cost of course, is the network. Most HMOs have good networks since they do not allow for out-of-network coverage. However, with many doctor groups and hospitals being able to negotiate better deals with different insurance companies, networks can become volatile. There are a lot of questions I ask on my RFPs, so if you'd like, shoot me an email and we can discuss further.

Allowing laid off employees to be treated differently than truly terminated employees shouldn't be a problem. However, could you clarify the following points: 1. Will the laid off employees continue to be on the health plan for an extended period of time? 2. How much time will fall between the implementation of the flex plan and the lay offs?

You definitely do not want to determine health care contributions by age because of, as you pointed out, discrimation issues. You can have different contribution levels by union/non-union, exempt/non-exempt or salary/hourly though. There are various additional ways to cap costs. Shoot me an email and we can discuss this a little more.

Kip has some good suggestions. There is definitely a way around whatever law you've recited since I have had several clients with locations in CA that have offered Pacificare or Kaiser. You should be able to write an HMO product on these employees. Since you now have employees in at least 2 states, have you thought about getting a PPO? This way, you can administer one plan for all your employees. How many employees do you have in OR? If you have a couple hundred, creating a PPO and putting them under your plan would probably make the most sense since you have some leverage come renewal time.

A lot is going to depend on the following: 1. Number of total employees being covered; 2. Number of employees who are out of the country; 3. Whether the employees are ex-pats or foreign nationals; 4. Which countries the employees are in; and 5. The insurance carrier itself. If you only have a couple of employees you are trying to cover, you'll probably be ok. However, if you have 200 employees and 100 of them are out the country, a U.S. insurance carrier is probably not going to want and take the risk. Additionally, some carriers are more flexible in taking on this risk than others.

A self-insured plan runs the exact same way a fully-insured plan works except that you are on the hook rather than an insurance carrier. Therefore, if your claims experience was better than expected and there is money left over at the end of the year, this will be reflected when calculating the equivalency rates for the next year and the rates my only go up 15% instead of 20%. Also remember, that self-insuring your health plan in and of itself probably isn't going to save you money. For every employer who saves money self-insuring a health plan, there is going to be one out there losing money. The key reason you should be looking at self-insuring your health plan is to take control over the plan. This will help you avoid any state-mandated benefits and craft a plan that fits your employee needs and works within your budget. Shoot me an email if you would like to discuss further.

Take a random sample of people on the street and if more than 50% of them knows what the term COBRA refers to even if you mention medical insurance in the same sentence, I'll give you $50,000.

So, you would rather face the possibility of getting dragged to court rather than just offer the spouse COBRA? Even if the court votes in your favor, you still lost due to the expenses incurred while defending your decision. Chances are that this ex-spouse is still enrolled in the plan as we speak if the employee did not notify the employer of the divorce. If this is the case, I would offer her COBRA ASAP and the 36 months would start from today.

I disagree that the ex-spouse of the employee should be penalized in this situation. Agreed that it is the employee's obligation to notify the employer of the divorce, however, since he or she did not, how could the ex-spouse have ever received her notification of COBRA? Just because literature was passed out at the beginning of the year or is listed somewhere in the employee handbook, this doesn't mean the employer gets a pass here. On a side note, if the employee never notified the employer about the divorce within 31 days of the qualifying event, then the employee should still have the ex-spouse on his or her coverage. Therefore, this employee would need to wait until next open enrollment to drop the spouse.

What happens to any unused amounts in an employee's FSA if a company shuts down? For example, say I have contributed $500 to my FSA because for a dental procedure in December, however, my company shuts down today. What happens to that $500? Is it reimbursed back to me?

I don't believe the carrier is going to hassle you on this situation. Since we are talking less than 3 months total, you'll most likely be ok since many companies extend company contributions for medical insurance out past 6 months for employees on disability. I would just put it in writing to the employee and stick to the 8/1 date. At that point offer her COBRA. If she comes back, just slip her back on as an active employee.

From what I understand, there only seems to be one company, MBI, that creates these debit cards. There are many administrators out there that can incorporate these into their plans, however, they all seem to use MBI. I suppose there could be other vendors of these debit cards, but I haven't heard of any.

I would go ahead and offer her COBRA. As papogi indicates, you have to take that you are setting a precedent into consideration. If she's a "good" employee you may want to work with her a little. Just realize whatever decision you make for this "good" employee is going to have to be the same for a "bad" one unless you want to take a chance of getting sued.

Check the archives. We had a thread several months ago about the pros and cons of these. I'm for them. Others are against them.

Most of them are going to cost $200 to $300. If you currently work with a broker now, I would just run everything through them or your plan administrator or whoever else is involved in your employee benefits, as long as you trust them. This way, someone else does all the work for you when it comes to changes in compliance and the like.

papogi is correct. we recently went through a thread on this board about different plan years for medical insurance and FSAs and this is one of the reasons it makes sense to have them on the same cycle. if the employer made the change to his medical insurance mid year then this point is moot, but 99% of the time employers make changes upon renewal.

Employers have every right to pay for 100% of medical premiums and this amount is not taxable to employees. If he was additionally reimbursing his employees for any medical expenses incurred without setting up a formal section 105 plan, then that amount would be taxable. But from what you posted, that doesn't seem to be the case.

How would you treat a situation where an employee is already at employee + family coverage and then adds a domestic partner? Would something be taxable here? The addition of this dependent wouldn't increase the premium, so is it safe to say that the employee and employer would not have to worry about imputed income in this situation?

Is premium paid for medical insurance on domestic partners able to be deducted on a pre-tax basis under Section 125? For example, let's say an employer's medical plan has rates of $200 for single coverage and $500 for family coverage. If an employee has a domestic partner and is required to pay 100% of the cost for dependent coverage, is the $300 able to be deducted pre-tax? If not, what do most employers do to handle this situation?

When I hear the term cafeteria plan, I always think of the larger picture of employers providing their employees with a lump sum of money and the employees picking and choosing the benefits that best suit them. If you are talking about a Section 125 plan or POP plan, then yes the employer can offer this without offering any funding for the plans. Just realize that for each line of coverage the employer may not getting the necessary participation requirements to secure the coverage.

Why have a cafeteria plan if the employer is not funding any portion on the premiums? It very well could be illegal simply because it doesn't make any sense.

The question isn't really dealing with the employee not wanting insurance because of the imputed income tax. It has to do with this person's religious affiliation. As Sandra indicated, the contract was written as non-contributory. Carriers will not usually allow for any employees not to take the coverage since 100% participation is assumed to calculate the rate. However, since this is a "special" circumstance, I would find it hard to imagine the carrier not letting the exception in this case. The carrier may want the empoyee to sign off on something indicating why he or she is waiving the coverage though.