papogi

I've never specifically seen this before, either. I agree with your reasoning. I think the spouse should be able to increase her DC election.

If your plan pays you the upfront charges you paid, then you have no responsibility to repay your employer. Be careful here. Ortho is often reimbursed to employees in monthly amounts corresponding to services as they are supposed to be rendered. Depending on the circumstances and exact nature of the charges, even though you pay the amount upfront to your dentist, you may not be reimbursed the full amount from the FSA all at once. Harry Beker of the IRS made comments in the past year concerning some situations where upfront ortho claims can be reimbursed, but not in all circumstances. Because of the gray area of ortho claims, different FSA plans can have slightly different interpretations of the regs here. Your scheme may work, but you may get stung.

Health Care FSA rules as they relate to COBRA: First, is this health FSA exempt from HIPAA? The health FSA is exempt from HIPAA if both of these are true: 1. The health FSA benefit does not exceed either two times the employee’s salary reduction election or, if greater, the employee’s salary reduction election plus $500. Assume, for example, an employee puts in $600, and the employer puts in $700. The employee is eligible for $1300, but only puts in $600 ($1300 is more than twice $600). This FSA, so far, is not exempt from HIPAA, and is subject to its rules. As another example, assume an employee puts in $100, and the employer puts in $600. The employee is eligible for $700, but only puts in $100 ($700 is more than $100 plus $500). Since such a large portion of the FSA is funded by the employer, the IRS sees this more like employer-provided insurance and is subject to HIPAA. Most employers’ health care FSA’s are funded entirely by employees. These are exempt from HIPAA since the IRS does not see them as employer-provided insurance. 2. The employee has other group health plan coverage for the year available from his/her employer, and the other coverage is not limited to benefits that are HIPAA excepted benefits. If the only other available coverage has limited scope benefits (exempt from HIPAA), the health FSA would not be exempt from HIPAA. If you determine that the health FSA is exempt from HIPAA (most are), there are two special exemptions from COBRA: 1. COBRA need not be offered after the plan year in which the termination occurs. This applies if the amount paid in would exceed the benefit. The 2% administrative fee guarantees this. 2. COBRA need not be offered at all if the employee has already been reimbursed an amount equal to or greater than the amount actually paid into the account. If the health FSA is exempt from HIPAA, and item 2 above does not apply, then flex COBRA will need to be offered for the remainder of the current plan year. All qualified beneficiaries can elect a health FSA. If you determine that the health FSA is not exempt from HIPAA, COBRA will need to be offered under the usual COBRA rules (18, 29 or 36 months). All qualified beneficiaries can elect a health FSA.

A 2001 plan year should be tested using the old rules before the EGTRRA changes.

Again, as long as they don't have any significant "pleasure" part added to the trip, I would also reimburse this.

You're exactly right that it's not intended to be a managed care program. Is the treatment prescribed by a physician, and intended to correct or alleviate the effects of a medical condition. Even though it's only the guy's pinky, this sure seems like it's "medical." If the treatment is not available in the US, then they have to go elsewhere. Expenses incurred in foreign countries are reimbursable. I think you are right that patients should normally go to the nearest place where something can be done. If they choose to travel, then there must not be a significant "pleasure" side to the trip, otherwise the travel expenses will not be reimbursable. I think that this is the test that the guy will fail. I realize he's going to France for the treatment, and he might not otherwise be going except that he has problems with his pinky. I think he's OK getting the medical expenses reimbursed, but the itinerary should be scrutinized before any travel expenses are paid.

Section 125 allows an employee to drop coverage with you in this case. Be sure that your specific 125 plan does, indeed, allow this change. A 125 plan is not legally required to honor any status changes.

125-4 (f) begins "Paragraphs (f)(2) through (5) of this section set forth rules for election changes as a result of changes in cost or coverage. This paragraph (f) does not apply to an election change with respect to a health FSA (or on account of a change in cost or coverage under a health FSA)." You are correct that these rules do apply to dependent care accounts, however. In my original answer, I only used "FSA" because I knew that Joe Vasko was concerned with health FSA's. I was responding to his specific inquiry. As a general answer, I should have prefaced "FSA" with "health."

If the procedure is being done in a typical, multi-services hospital, I don't think the IRS would argue that the hopital does not satisfy the " equivalent of a licensed hospital" provision in Section 213. My opinion is that you are safe there. As for the vacationing aspect of the trip. Request an itinerary showing all the days in France and a brief description of the events of each day. You can then reimburse the travel expenses each way, and then determine if say more than half of the days were spent with no "medical purposes."

The IRS doesn't care who actually provides the services. The restriction is that the services generally must be prescribed by a physician. The Section 213 definition of physician includes the rule that they must be legally authorized to practice in the state. As long as this is satisfied, it appears this could be reimbursable. Be sure that there is no significant "pleasure" side to this trip.

2002-24 was very confusing. It only states that F is not required. Further guidance from the IRS has clarified that the 5500 is not required for a 125 plan to the IRS. 2002-24 had no bearing on your potential responsibility to file under ERISA. Since you have more than 100 participants (and are not a gov't or church plan), you still must file. You will file for the medical plan and the FSA. I am very surprised that the DOL said you didn't need to file, because I doubt they would be speaking for the IRS, in which case their statement is correct. You still must file with the DOL.

You don't mention if the employee terminated while on LOA. If not, and the catch up option is elected, then the FSA must stay in force. The employee has access to the full amount (the uniform reimbursement requirement still applies during LOA). It becomes more complicated if the employee has claims paid during the LOA, and then does not return.

I am assuming your plan covers more than 100 participants. If not, let me know. There is no 5500 requirement for the cafeteria plan (2002-24). While there is no filing requirement for the 125 plan, there may be (along with any appropriate schedules) for any underlying plans if they are subject to ERISA. The dependent care accounts are not subject to ERISA, so there's nothing to do there. Unless you are a government or church plan, you will have to file a 5500 under ERISA (not the IRS) for the health care accounts.

I agree with MSMA's analysis. A doula seems most similar to birth classes. I would pay it if the employee can provide something indicating that the doctor at least recommended the services of the doula.

A Premium Conversion Plan is a Cafeteria Plan, and is a fringe benefit plan under 6039D.

That clause is saying that if an employee elects $500 for the year, and basically redirects the entire $500 at once (rather than on a pro rata basis where deductions are taken at regular intervals), then that employee is entitled to receive some of that $500 back if they terminate. If they terminate exactly half way through the plan year, they should get $250 back. The provision has nothing to do with the uniform reimbursement requirement. The employee is entitled to the full $500. In fact, the employee may even be entitled to some premium reimbursement depending on how the FSA payroll deductions were being taken. If this is the provision that the TPA is using to justify their not sending the full $500, they are reading it incorrectly.

See 125-1 Q-7 and 125-2 Q-5© for guidance. Elective vacation days (days for which there is a cash option) cannot carry over to the next year, or deferred compensation issues are raised. The elections concerning vacation days should occur each year.

The employee is definitely entitled to the full $500.

You're right. The Thompson's manual's statement that some COBRA premiums are payable through a health care FSA is incorrect. All the regs say is that they are sometimes payable through increased pre-tax payroll deductions directly into the 125 plan, but not specifically through the health care FSA. I confronted the editor of Thompson's on this, and I wouldn't be surprised if they change their interpretation of 125-4.

COBRA premiums may be reimbursed if the COBRA coverage is provided by the sponsor of the flex plan. COBRA through another employer's health plan is not reimbursable. My original statement is a bit misleading. Technically, they are simply increased payments to the employer on a pre-tax basis to cover the COBRA premiums. The Thompson's manual boils this down to say that they are reimbursable under an FSA, although the semantics of that statement are arguable.

As long as the employee has requested these changes within the time frame allowed under your particular 125 plan, he can stop the DCFSA (and should since his spouse is now in a position where they are no longer eligible for a DC account, he can raise his HCFSA election (addition of a dependent allows an employee to start or increase a HCFSA election under 125-4), and under no circumstances can HC and DC monies be intermingled/tranferred. Incidentally, what COBRA premiums would these be? Only some COBRA premiums are payable under HCFSA's.

Check out these recent comments by Harry Beker concerning up-front reimbursement of orthodontic charges: http://www.ebia.com/weekly/articles/2001/C...HarryBeker.html Most FSA plans provide that the employee is reimbursed only as monthly payments are made. Obviously, there seems to be some room for interpretation, as long as your judgement is applied uniformly. If a participant has no dental coverage, or has reached the lifetime maximum for ortho, your life will be easier. As long as any dental insurance is possible, I would only reimburse based on EOB's which show the employee's portion. Once the lifetime maximum is reached, the employee should not need to submit copies of EOB's any longer. Post again if I am missing your question.

Will this fall under FMLA? Under FMLA, some companies (not many) will foot the employee's contributions into a HCFSA while he/she is out on leave. If they do, then the HCFSA continues without interruption. I think this is the case you are describing. If, however, the employer expects reimbursement, she should have pre-paid before going on leave, or she should pay as she goes. If the leave spans into the next plan year, any HCFSA election can continue to be paid by the company. If the plan provides that the returning employee must pay back the employer, she can do that when she returns. Concerning the DCFSA, this should cease the day she starts the LOA. She is no longer eligible for the DCFSA at that point. As far as open enrollment, it is typical that if benefits begin on 1/1/03, the open enrollment period is this October/November/December. You mentioned January, so that gets me wondering. Elections must be made before the coverage begins, so there really should be no activity in January. Either way, the open enrollment packet/info should be sent to this employee so that she can make elections for the new year from home. She can instead make elections when she returns, but only on a prospective basis, and only if this LOA provision is applied uniformly. Let me know if I'm not hitting your question.

In tjgiles' instance, the cleanest way would be to have the effective date be the first of the month following submission. They have 31 days to submit following the status change, and that's right in line with what the IRS wants. In order to prevent any retro coverage (the election must be made before the coverage period begins), the pre-tax deductions could then begin the first of the month following submission.

The IRS rules in 125-4 are maximum standards. A 125 plan can be written with more restrictive rules (such as not allowing status changes at all, or limiting reimbursable items under an FSA, etc.), but they can't be more generous. The reason that the IRS has the no-retro rule is because it wants to guarantee that election changes are consistent with, and on account of, family status changes. Allowing election changes past the usual 30 day time period (whatever time period is spelled out in your 125 doc) opens up the IRS to interpret the change as one being made because an employee forgot to make the change when they should. Going against this rule, even when you understand the employee's frustration, can potentially set up the employer and all 125 plan participants for costly ramifications. Somewhere along the line, employees must take some responsibility for their benefits. If your carrier will allow the change to the underlying plan (or, if you are self-funded, you are willing to make the exception, thereby setting a precedent for any similar situation in the future, and you feel you can get this by any reinsurer), then you may be able to allow them on the underlying plan through after-tax deductions until the next open enrollment. I would be very careful when it comes to your 125 plan.