Larry M

Many years ago, a newly referred prospective client wanted a fairly complex study done involving present values of future renewal commissions. When he asked me to estimate the cost, I told him I could not do so because there were too many variables. He decided to use us anyway, signed the retainer agreement and paid the $500 retainer. The study was complete, and the client was satisfied (as my mother, of blessed memory, would say - "of course!") with the end result. I presented a bill for the work done - $1,700 less the $500 retainer, for a net of $1,200. [by noting the total fee, you can tell it really was many years ago!!] The client balked and insisted I was entitled to only an additonal $500. When I asked him how he could justify that, his argument was: "I will pay you only another $500. Larry, you remember I asked you how much it would cost? you answered 'I don't know, but I will take $500 as half.'" The story was worth the difference in fee, and I accepted the offer.

Yes. [That's the short answer. A short expansion follows:] An employer can pay all or part of the premium for any group of employees and dependents, except in Hawaii where the law requires coverage and dictates the minimum employer contribution.

I agree withthe comments of Jeanine and Kip. On the other hand, if I were to deny paying for the expenses of delivery, I might argue it is excluded because the "injury or illness arose out the insured's employment for profit or gain"?

a common provision in health plans is to say there will be no payment in the situation where no charge for services would be made in the absence of insurance. So, for example, if the facility would charge the prisoner a fee for the medical care only if he had insurance, then the plan will not pay for such services.

Does the plan include an exception for services for which no charge is made in the absence of insurance?

You should post your question in the "Government Plans" section of the message boards. But, as long as the question is here, here are my comments: a.I'm with pax as far as my "d'ruthers'. b.I believe the state plan is exempt from ERISA requirements (as most are); some, though, do refer to ERISA for certain items - such as funding. c. As for the special benefit, you never can tell what a state retirement plan will allow, especially if the particpants can convince the voters to agree to it.

Kip, notice I said "effectively". The judge did not rule the plan had to pay the ex-spouse. What he did do was to refuse to place a current value on the benefit. If he had done so, the value would have been added to the other community interests and the total property would have been divided equitably....well, at least divided. Instead, the judge required the participant (not the plan) to pay to the ex-spouse an amount equal to a portion of the value of any services received by the participant at the time they were received by the participant. It was a very logical decision IF you (1)accept the fact that the retiree medical plan is recognized as having a value and is part of the community interest, (2) you do not wish to place a number on that value as of today, and (3) realize the ex-spouse is entitled to something of value as part of the community. Of course, using that logic led to an irrational decision.

A major concern (which is not the question originally posed) implied in this thread is not "what assets or liabilities are to be transferred from the single employer plan?". Rather, a major concern is what liability is being transferred to the single employer from the multi employer plan?

Yes, it is legal. Companies may provide differing benefits or require differing contributions for the same benefits among various groups of employees.

In at least one community property state - California - the value of the post retirement medical benefits is considered part of the community's assets. Therefore, the value is added to the value of other property (house, car, bank accounts, debts, etc.) to determine the total value of the community. Once that is determined, the properties are divided between the two parties. [as an aside, in one situation, the judge would not accept a dollar value of the medical benefits (disparate values by the two expeerts). Instead he ruled, effectively, that when the retiree had a medical benefit in the future, the ex-spouse was to receive one-half the value of that benefit. hmmm, how does one give one-half a hernia operation?...]

The Society of Actuaries website http://www.soa.org/ and the American Academy of Actuaries website http://www.actuary.org/ will lead you some of their publications Under the Society's Education section, review the Study Notes and reference material for the exams on health care; and on reinsurance and risk. from the Academy's website, you should be able to locate monographs published by the Academy (and Society) concerning funding of health care and Medicare. I am not sure whether these publications are available directly from the site or if you will need to purchase them in hard copies.

I understand COBRA requires the qualified beneficiaries be allowed to have the same coverage available to active employees. If there is a gap for actives, then the q.b.'s have the same gap. For example, if the coverage stops for two months and then the employer starts up with a new plan, the q.b.'s should be entitled to return to the new plan for the balance of their period (with no extension because of the gap).

If you are talking about retirees and wish to segregate those who are eligible for Medicare, look out!! A recent federal district court of appeals decision held the company erred in providing different benefits for those who were Medicare eligible and those who were not. If you are talking about employees who are eligible for Medicare, and if there are at least 20 employees, your plan must be primary and Medicare is secondary. That means you are stuck with the higher costs of the older employee. Presumably, the court's decision involving retirees would make it difficult to succeed in a law suit if you were to spin off a group of elderly employees and give them benefits which are not as good as those of the younger employees.

Free401k, surely, you didn't mean "..our legal opinion..", did you? I'm sure you meant your "lay opinion" or "your layman's understanding of the law".

Since July 6, 1998, the right to continue coverage following a qualifying event also applies to group policies and contracts providing only noncore benefits, such as dental benefits or vision care benefits, issued to employers (with as few as 2 employees) covered by Cal-COBRA.

HIPAA applies only to those group health plans which are subject to ERISA. Some plans are specifically exempted from ERISA's application. Specifically, Title I does not apply to: ..... 3. A plan maintained solely for the purpose of complying with applicable workers' compensation laws, unemployment compensation, or disability insurance laws;

The "norm" will depend upon the purpose of the illustration. Where the employer is trying to show the employee how much is being paid on the employee's behalf, the employee illustrations of benefits and "costs" we prepare for our clients usually include mandatory benefits (wages, workers comp, unemployment insurance, fica, etc) and voluntary benefits (sick leave, paid holidays, retirement plans, health and welfare plans, disability plans, etc.) For those items which are easily identifiable, we use the exact amount (wages, fica, defined contribution plan..); for those which are not so easily identifiable (group life, defined benefit) we will use either an average per employee, an average based upon compensation or some other reasonable basis of allocation.

JPCMPLS is right - you can switch from sep to 401(k) BUT be wary!! Heed Bill Berke's implied advice. There are many decisions to be made in determining the parameters of a 401(k) plan and a SAR/SEp provider is not the place to go to determine how you should structure the plan. Get good, independent advice from a consultant who is working for you. You do not want to lock yourself into a "simple prototype" 401(k)just because it is easy to set it up.

why roll money immediately? why not maintain plan, continuing contributions and distributing the minimums from the plan itself? If the situation is appropriate, have deferred vesting, with nra = the later of (1)65, and (2) 5 years participation - which defers the mrd.

(expanding upon the comment by pax:) In some states, for some plans, for some government plans (how's that for specificity?), the courts have ruled there is an implied contract entered into upon employment which prevents an agency from reducing the benefits of employees hired prior to the date of change - unless the plan specifically provided for the change.

A. If you will tell me what part of Texas you are in, I can refer you to at least one actuary you can trust and whose opinions will stand up in court. B. The tone of some of the comments on the message board may have implied the actuarial expert can pick numbers out of the air and hope it will stand up. That is not so. At least not from a qualified actuary. My original response to you was that, in my experience, the methods used must vary in accordance with the laws, rules and regulations of the court in which the case is situated. For example, some states require the actuary to use a formula which is patently incorrect - but is what the law dictates. C. I do not know if the State of Texas recognizes retiree medical benfits as a value to be added to the community interest. It is my belief that it IS an important value, and that belief has won its way through the State of California's Court of Appeals. However, I do not know whether Texas courts will recognize that item. But, you should definitely try to get it counted. Note, though, even in California, where the value is recognized, some lower courts do not know how to handle the benefit. I was involved in one case where the judge said that, rather than awarding a cash amount equivalent to half the value of the retiree medical benefit, when the employed spouse received a direct benefit, the ex was to receive half the benefit. A ridiculous situation - consider if he had a quadruple heart bypass operation would she be forced to have a bilateral one? D. As to the information the actuary will want, it will include a copy of the plans (a summary plan description should do), vital statistics - dates of birth, marriage, employment, date of separation, salary history (usually for the last three or five years), copies of the last benefit statement given to the participant, and, sometimes, a description of the health of the participant...and any other bits of data you might get from the plan/company.

There are many ways by which a benefit is valued in a divorce action. It depends upon rules, regulations, laws and customs of the state (and sometimes the court within the state) of jurisdiction. Generally, the value of the benefit to the participant is calculated as the value of the benefit earned to the specified date (usually the date of separation, or divorce or whatever has been agreed upon). In a community property state, such as California, the "community property" is usually the portion which has been earned during the marriage. This is calculated either by taking the pro rata share of the benefit earned or, sometimes, by determining the increase in benefit earned during the marriage. The result may be the amount which is equivalent to the value of the lump sum payable as of that date determined a.in accordance with the plan's definition of actuarial values, b. same as a, except using the current level of salary, instead of the plan's "average salary". [this usually provides a higher value], c. in accordance with the actuarial values determined by statute, d. in accordance with the actuary's best estimate, using his/her own reasonable assumptions, or e. using a benefit which assumes the particpant's salary will increase in the future and basing the earned benefit upon the proportionate share of the projected final retirement benefit. It may take into account any subsidies for such items as early retirement or other enhancements. With respect to your second question, in California, a community properety state, the courts have considered retiree medical benefits to be part of the community - which means they, too, are valued.

just a couple of thoughts - a. I assume your wife is covered under your current group plan. If so, then, presumably, you have lots of "credited coverage"; a carrier can not use her health condition to prevent you from getting a regular insurance plan and it may not invoke a pre existing condition provision. b. going corporate from sole proprietorship also involves other expenses which may (I emphasize "may") be greater than the cost of paying on an after tax basis. c. instead of an individual plan for you and your family, look for a group plan offered through an association such as your college alumni or local chamber of commerce or association of specialty shops.

From RIA: ¶113,734. New York. New York directs that all group accident and health insurance contracts 28 and all group contracts issued by a hospital service, health service, or medical expense indemnity corporation 29 must permit employees and their dependents to continue coverage, without evidence of insurability, when all or any portion of the insurance ceases because of the employee's termination of his job or membership in an eligible class. 30 Coverage must begin within 45 days after termination of coverage, and after application and payment of the first premium. It must include the minimum standards for basic hospital and medical or major medical coverage included in the insurance department regulations. If the insurer does not issue a major medical contract, coverage must include a comprehensive or comparable type of coverage commonly sold. 31 The benefits may continue for 18 months or, if earlier, the end of the period for which premium payments were made, if the employee fails to make a timely payment, or the date when the group policy is terminated or an employer terminates participation in a group policy. However, where the policy is replaced by similar coverage under another group policy, the employee has the right to become covered under the other policy for the balance of the 18 months. 32 Continuation is not available for any individual who is covered or could be covered by Medicare or another insurer that does not exclude or limit preexisting conditions, but an employee who receives Social Security disability benefits because the employee is disabled at the time of termination may continue insurance coverage for 29 months after the date that the employee's coverage would otherwise have been terminated. If the employee ceases to be disabled, coverage terminates the later of (1) 18 months after normal termination of coverage or (2) the month that begins more than 31 days after disability benefits terminate. 33 28. NY CLS Ins Law § 3221(m) . 29. NY CLS Ins Law § 4305(e) . 30. NY CLS Ins Law § 3221(m)(4) ; NY CLS Ins Law § 4305(e)(4) . 31. NY CLS Ins Law § 4305(e)(1) . 32. NY CLS Ins Law 3221(m)(4) ; NY CLS Ins Law § 4305(e)(4) . 33. NY CLS Ins Law § 3221(m)(1) ; NY CLS Ins Law § 4305(e)(1) ; NY CLS Ins Law § 4305(e)(4)(D) . An employee who is determined to have been disabled at the time of termination of employment may obtain continuation coverage for 29 months from the date that the employee's benefits would otherwise have terminated, unless the employee's disability ceases to exist. If the employee is no longer disabled, continuation coverage terminates on the later of 18 months after benefits would have terminated under the initial group policy, or the month that begins more than 31 days after the ate of a Social Security determination that the employee is no longer disabled. 34 34. NY CLS Ins Law § 3221(m)(4)(D) ; NY CLS Ins Law § 4304(k)(4)(D) . Continuation coverage for an eligible dependent of an employee must continue until 36 months after the date that benefits under the policy would otherwise have terminated due to the death of the employee, the eligibility of the employee for Medicare, divorce or legal separation, or the dependent child ceasing to qualify as a dependent child under the initial group policy. 35 35. NY CLS Ins Law § 3221(m)(4)© ; NY CLS Ins Law § 4304(k)(4)© . In order to obtain a continuation of coverage, the employee must send a request and the first premium payment within 60 days of the date of termination or, if later, the date that he was given notice of his right to continuation by the employer or the group policyholder. Demand for premium payments cannot be more frequent than on a monthly basis and the amount of the premium cannot exceed 102% of the group rate under the group contract. 36 36. NY CLS Ins Law § 3221(m)(2) ; NY CLS Ins Law § 3221(m)(3) ; NY CLS Ins Law § 4305(e)(2) ; NY CLS Ins Law § 4305(e)(3) . An employer who receives notice that the employee has elected to exercise the continuation right must remit the premiums to the insurer no later than 30 days after the receipt of premiums from employee and must provide evidence to the employee that the premium has been remitted. 37 If the policyholder fails to comply with the law, it may forfeit a sum up to $5,000, to be recovered by the commissioner in a civil action. 38 In addition, the policyholder is liable in a civil action brought by the employee for appropriate damages, including reimbursement for medical expenses not covered by the policyholder's in- surer because of the failure to remit the premium. 39 37. NY CLS Labor Law § 217(6) . 38. NY CLS Labor Law § 217(7)(a) . 39. NY CLS Labor Law § 217(7)(B) . An eligible dependent of an employee may continue benefits until the date 36 months after the date that the dependent's benefits would have otherwise terminated because of (1) the death of the employee, (2) the divorce or legal separation of the employee from his spouse, (3) the employee becoming entitled to Medicare benefits, or (4) a dependent child ceasing to be a dependent child under the insurance contract. 40 40. NY CLS Ins Law § 4305(e)(4)© . In addition, an employer must notify any employee terminated from employment, in writing, of the exact date of termination as well as of the exact date of cancellation of employee benefits connected with the termination. In no case may the termination notice be provided more than five working days after the termination date. Failure to notify an employee of cancellation of accident or health insurance subjects the employer to an additional penalty under NY CLS Labor Law §217 (footnotes 17.1-17.3). 41 41. NY CLS Labor Law § 195(6) .

sole proprietor (nee Keogh) plans almost follow the same rules as corporate plans. There are some significant differences - for example - loans.