Larry M

Are they polka-ing fun at us?

sorry for the delay in responding - the flu got me good! I believe the dollar limit is a percentage of the average premium rate for the largest plans.

The Federal Employees' Plan has had an employer contribution for many years which is the lesser of (1) a percentage of premium and (2) $X - and it works very well.

Although there may not be a special enrollment option in the plan, the plan may allow the student to enroll with satisfactory evidence of insurability.

If he terminates the old plan, all the employees become 100% vested and have the option to have their accounts distributed to them as soon as termination is final. If he terminates the current plan and asks for a determination letter, and if IRS audits and finds errors, who picks up the tab? Current owner or previous owners? If company was sold and new owner is in place - he may be stuck with past sins anyway.

If client is concerned about language in old plan, why not persuade him to amend the plan in its entirety (as opposed to just adding the 401(k) provisions?

There are different laes, mandates and regulations in each state. Generally, states recognize this and will accept the group policy issued in another state. So, in your example, State A should not require the carrier to amend its contract to cover domestic partners. However, State A or the local governmental entity may require that employers doing business within the jurisdiction recognize domestic partners if they wish to do business with the governmental agency. In such a situation, the employer must provide the coverage for those employees.

Frank, What kind of radical are you? Beginning of year valuations?? The nerve of giving your client and his/her accountant the range of contribution for the coming year. How could they survive not having to scramble at the last moment to determine (a) how much contribution was needed, and (b) where to get the cash? Heresy, that's what you are practicing.

what happens if the plan becomes top heavy? Do new participants get the top heavy minimums?

[to those who read the first unedited response, my apologies for pressing the "reply" button before I had written anything. then, again, for those who read this response, I may have to apologize again....] There are two good places to meet health actuaries: 1. The Conference of Consulting Actuaries annual meeting this fall in San Antonio, and 2. One of the many Society of Actuaries' Health Sections meetings during the year. You can find their meeting information at the respective websites http://www.ccactuaries.org/ for the Conference, and http://www.soa.org/ for the Society.

[This is a laymen’s (non-attorney’s) attempt to differentiate among the various terms in your question.] The Plan Document is the contract which states all the provisions of the plan and delineates the various responsibilities for financing the plan, the eligibility, and all the other aspects of the plan. The plan can be self funded in full, insured in full or a combination of both. An SPD is a Summary [of the] Plan Document. This is supposed to describe, in simple language, the terms of the Plan Document which relate to such items as the benefits provided, the persons eligible, the way in which an individual becomes eligible, the persons responsible for maintaining the plan, and the ways in which appeals can be granted The Group Policy is the contract between the insurance company and the plan sponsor. It may be the same as Plan Document, or it may be part of the Plan Document. A Certificate of Coverage is a document provided by the insurance company to describe to the insured individual the terms of the insurance plan. It may contain all the information required in a summary plan description but, in many cases, it does not. In the latter case, you may be able to turn it into a SPD by attaching a page which includes the missing information (usually involving plan sponsor name, employer identification number, address and telephone number, name, address and telephone of the plan administrator and the person designated as agent for service of legal process, plan’s fiscal year end).

I assume you mean "carrier" or "insurance company" or"hmo" when you say the "provider". As such, the carrier is asking for a simple definition of those who will become eligible to receive retirement benefits. This is the same as it requiring the sponsor to determine eligible active employees and dependents. The employer wants to pick and choose those employees who, at the time they retire, may be eligible for this special privilege. The carrier is concerned that the employer may pick only those retirees who are sick, and abuse the system. So, you need a compromise. Perhaps you should consider limiting those eligible for retiree benefits to the ones who were covered by the previous carrier. At the same time, the sponsor should investigate the probable costs of providing retiree medical and determine whether it can truly afford this luxury. After such a study, the employer may want to look at alternate means of recognizing these individuals' long service.

If two plans are available, does an individual who retires at, for example, age 63, have the option of COBRA extension at 102% of active premium vs early retiree plan at 125% of active premium?

Try calling someone at Met Life. If has a vast library of tables.

I believe the threshhold is 20 employees. from Medicare web site: "In most cases, Medicare is primary. Some of the most common situations where Medicare can pay secondary are: -The individual or his/her spouse is currently employed/working and covered under an employer group health plan as a result of current employment. The company has 20 or more employees or participates in a multiple-employer or multi-employer group health plan where at least one employer has 20 or more employees. -Individual in question is entitled to Medicare as a result of a disability, the company has 100 or more employees, or participates in a multi-employer/multiple-employer group health plan where one employer has 100 or more employees. -The individual in question is Medicare entitled due to end-stage renal disease. Medicare is the secondary payer to a group health plan until a 30-month coordination period has ended." In the latter two cases, this is for individuals who are under age 65.

If there is a concern about "fairness", and if the document is silent as to these anomalies (which are not unusual), why not discuss the option with and get the intent from the client and then amend the document to arrive at whatever result the client wants? On the other hand, it is more fun to go back and forth among those of us wh o are not directly related to the situation.

Are you trying to assess the level of benefits or are you trying to value the various levels of benefits? If the latter, you should consider, as a first step, a review the Actuarial Standards of Practice No. 6, which discusses the measurement of retiree benefit obligations. Its link is http://www.actuarialstandardsboard.org/pdf...asop006_084.pdf After that, get an actuary who is experienced in the field to help you. As to the funding of the benefits, life insurance is not always the best answer. Sometimes it is better to fund from the general assets of the plan sponsor - if it is large enough - and to have NO post retirement health benefits if the sponsor does not have unlimited funds available.

By the way, claims administration is not a simple process. It includes (or should include) negotiated discounts from providers. For example, under the insured plan the "retail costs" of a procedure might be $20,000, but the negotiated fees may total only 12,000 (or, if you listen to the docs and hospital, 2,000). So, in addition to not providing the insured coverage for these 7 employees, he is forcing them to pay higher rates for almost every medical service and supplies than under the old plan. The office manager can not just "write a check" without determining if the expense meets the requirements of the plan andis not a duplicate payment, or a non-covered expense. HIPAA requires the employer to maintain privacy about the employees health information and the cost of establishing an appropriate wall between the person handling the claims and the rest of the company may be greater than the annual outlay for the 7 employees. Of course, he could deduct the administrative costs from the fund and save even more money. As others have implied, something is missing here. We do not know the employer's reasons for doing this. What is the real motive? It seems peculiar to continue to pay for hourly workers and shaft the salaried ones. Why not, instead of putting the money in a fund for self funding, just limit the employer's portion of the premium to the current level (perhaps adjusting it periodically) and having the employees pay the balance. Or, does the employer know that one of the seven is really sick and will be causing the insured plan's rates to go sky high next year unless the employee is removed from the health plan? Nah. What employer would be motivated by such a thought?

The match does not have to be a lot to make the plan enticing to employees. The employer could limit its discretionary match to 10% of the first 6% of employee deferral, with a total matching limit of no more than 1/2% of eligible payroll. In addition, the employer could provide a discretionary profit sharing contribution limited to another 1/2% - 2% of eligible payroll, with allocations by class. A key here is to determine the upper limit of additional compensation the employer is willing to provide to its employees in order to make the plan viable for more than 60 employees. As was noted earlier, the costs of this plan, to the employer, are way out of proportion to the benefits gained by a few employees. Why is it willing to pay those fees with so little reward, when with a very small discretionary contribution, more employees would benefit and administrative costs would not increase very much? As for your question concerning pricing this client (or any client) , that is not appropriate for this board, in my opinion.

You probably could require an employee to pay an additional premium for each dependent. However, you are adding an administrative complexity and expense to your program. Also, you are setting yourself up for problems where the employee forgets to add (or subtract) a child to his/her payroll deduction. How is the carrier going to know whether an individual is covered? How does the policy define covered dependents? Does the policy require a contribution for each dependent or, most likely, does it just say, the employer may require contributions fromemployees for dependent coverage. If the latter, you may have difficulty excluding a child from covereage if the employee has paid for at least one dependent.

If you are an employer in Hawaii, you must make coverage available to employees who work at least 20 hours per week for at least four consecutive weeks. There are mandated and minimmum benefits and other issues. The employer must contribute at least 50% of the employee premium. There are cetain employers, mainly agricultural, whose seasonal employees can be excluded. You can get additional information at Hawaii Health Systems Corp

Fortunately, my entertainment industry clients will have no difficulty with the newly announced tax enforcement concerning gift bags. They are so used to getting rid of bags under their eyes, they will have no reservations about returning to the surgeon's office to remove the gift bags under their arms.

Harry O, "Are these plans considered self insured for purposes of section 105(h) of the Code?" If the minimum premium plan is structured in a classical manner, then it is an insured plan. For example, the insurer agrees to an advance monthly premium rate ("a), which is collected on a regular basis, and then has access to a retrospectively determined amount (not to exceed "b") so that the total of the year's "a" collected premium plus any retrospective premium equals the benefits incurred during the year and the insurer's retention (charge for for such items as administration, marketing, premium taxes, general overhead and proft).

The following link may help you get an answer: http://www.socialsecurity.gov/pubs/10137.html#when

The plan would have assets remaining. The sponsor (or successor sponsor) could have a number of options, among them: 1. take assets back as reversion - and pay whatever taxes are applicable; 2. continue the plan with other, new employees; 3. merge the plan with another plan