papogi

You can send an out-of-network claim to the PPO for repricing, but they will come back saying the provider is non-par. There is no negotiated rate, and no repricing. Claims adjudication for PPO's typically use UCR in these cases, and I've most often seen 80% of UCR. A few plans will use the prevailing negotiated rate for out-of-network services.

I assume you've paid taxes on the conversion over the past four years. The 10% penalty still applies in this year (you are about to satisfy the 5 year provision). If you wait until 2003, there will be no penalty and no taxes on any distribution that represents your converted amount.

If the plan offers early detection benefits which are age-banded (e.g., cholesterol check every three years if you are under 50, and every year if you are over 50), then the plan might want to verify ages before handing free benefits out. Still seems excessive to me, but if it's done on a uniform basis, appears legal. I think they can legally deny coverage if the documentation is not provided.

One more thing to add. Keep in mind that if the investment vehicle you select through Scottrade (or someone else without an annual IRA maintenance fee) might impose an annual fee. If you select a mutual fund through Scottrade which has a $10 annual fee, you still have to pay the fee. So, with eTrade, they now charge a fee as well, on top of the possible fee from the underlying investment?

Go with Scottrade. I think Datek may not charge the fee, but I know Scottrade does not.

Per 29 CFR Part 2590(4)(B), a plan has the right to turn down a child support order if the plan does not offer family coverage. I guess the named custodian will have to buy an individual policy for the child in that case.

If it's available OTC, then I would agree, no.

ERISA Section 701(f)(1) states that for an individual to be considered under the special enrollment provisions, that individual must be eligible under the plan. Further, 701(f)(2)(A)(i) alludes to the possibility that dependents can be written as eligible or ineligible under a plan.

Yes. Individual policy premiums can be taken pre-tax for the employer to use to pay the issuer. What you can't do is take pre-tax deductions, let the employer pay for coverage on behalf of the employee, then reimburse, tax-free, the employee for those costs using those pre-taxed dollars. That would be double-dipping. You're OK under 125, but HIPAA can cause some complications when it comes to individual policies through an employer.

HIPAA has a provision which allows plans to completely disallow dependents. This way, your plan would not be subject to HIPAA's special enrollment rules concerning dependents. HIPAA is careful to say that its rules apply only to individuals who are eligible under the plan.

VTSMX is correct. In view of the turmoil in the markets even over the last week, please remember that this investment will fluctuate. I have every confidence that, taking a long-term view with this investment, you will come out happy years from now. Be sure to request and fill out the correct form. An individual can buy this or any fund as a regular, taxable account, or as a Roth IRA, or Traditional IRA. Be sure that you are completing the Roth IRA application, if that's what you have decided on. There is an expense ratio built into the fund, as with all mutual funds. Vanguard skims off a small percentage each year to run the company and pay the people involved. Vanguard's expense ratios are known throughout the industry as being very low. You will also have an annual IRA maintenance fee. Frankly, I forget the amount that Vanguard charges. It's typically $10 to $25 each year, and can be deducted from your account, or, better yet, sent in by you with a separate check. This keeps as much in your account as possible. Incidentally, this annual IRA fee is said to go towards the additional IRS reporting hoops the mutual fund must go through as compared to a regular, taxable account. With a Roth IRA, there is absolutely nothing you need to do on your taxes as you add to your account and let it grow. Earnings will grow tax-free. A money market is a great idea. This will be a regular, taxable account, so you will pay income taxes each year based on the amount of dividends earned in the account. Incidentally, Vanguard has a great money market, as well. It's called Vanguard Prime Money Market (not the tax free one, but the regular Prime Money Market). It's currently yielding about 1.8%, which is low like the rest of all money market funds right now, but you will probably find it to be leaps and bounds better than your bank. It's only a bit less convenient to use money markets outside of banks, but the increased return more than compensates. For instance, you could keep a regular checking account for small expenses, and Vanguard Prime as a short term savings vehicle. Your employer (most allow this) can split your paycheck between the two destinations. So, you have some money going into your small checking account, and the bulk go to Vanguard. Vanguard Prime gives you checkbooks, and you can only write checks for amounts greater than $250. So, your small bills can be paid form your checking account, replenished periodically by your paycheck. Big bills can be paid with a Vanguard Prime check (credit card bills or mortgage payment), also being replenished by your paycheck. This is exactly what I do. Post again or Private Message me if you want any details.

A POP is a pre-tax funding mechanism under Section 125, and is really never a welfare plan. As far as your 5500, your POP does not need to file a 5500. If you have over 100 participants, your underlying welfare plan (the health plan) does need to file a 5500 under ERISA Title 1, unless this is a government or church plan.

I have been reading and grinding and reading and grinding this one for awhile! 105(h)(6) and 1.105-11(B)(1), even better, state that a self-insured medical reimbursement plan is an employer plan set up for the benefit of employees and reimburses medical expenses not paid through accident and health insurance. If a plan is classified as a self-insured medical reimbursement account, it must satisfy non-discrimination rules in 105(h) AND in 1.105-11, as stated in 1.105-11(a). To pass the rules in 1.105-11, a plan must satisfy both subparagraphs (2) and (3) in 1.105-11©. Subparagraph (2), Eligibility/Percentage, basically states in (i) that 70% of ALL employees must benefit from the plan (like 105(h)). It goes on to state in (ii), Eligibility/Classification that highly compensated individuals must not be favored in the plan with regards to any classifications. It also says that facts and circumstances will be used to determine this, but that, generally, the standards in 410(B)(1)(B) will be used. The rules in IRC 410 state that a plan must benefit a percentage of non-HCE’s which is at least 70% of the percentage of HCE’s benefiting under the plan. This means that if 100% of the HCE’s benefit from the plan, then at least 70% of the non-HCE’s must also benefit from the plan. As long as any classifications are normal business classifications and do not make the plan fail this test, then the classification is OK. Moe Howard, I understand your statement that (i) and (ii) are independent tests. 105(h) says that a self-insured medical reimbursement plan cannot discriminate in favor of HCE’s with regard to eligibility, with no specifics or standards. What if your classifications were clerical and non-clerical, rather than HCE’s and non-HCE’s? There does not seem to be anything in 105(h) or 1.105-11 that says this cannot be done. Classifications and different eligibility probationary periods seem to be allowed under self-insured medical reimbursement plans as long as HCE’s are not favored, as defined in 105(h) and 1.105-11. What if your classifications were clerical and administrative (mroberts kind of alluded to this) and clericals have to wait 6 months, while administratives are on immediately? Are HCE’s being favored? How do you know? There are no clear lines between HCE’s and non-HCE’s. You have to apply the quantitative rules in 105(h) and 1.105-11 to get the answer. The line in 105(h) that simply says that HCE’s cannot be favored is too vague and of no help. You cannot just use that sentence at face value. Under this plan design, HCE’s may or may not be favored with regard to eligibility. You would have to run the numbers. Even though Moe Howard’s post says that this employer classifies employees by HCE’s and non-HCE’s, you still have to run the numbers to determine if the HCE’s are truly being favored with regard to eligibility under the standards to be used for self-insured medical reimbursement plans. They may indeed be favored, but they may not be. Even with classifications as obvious as HCE’s and non-HCE’s, the HCE’s still may not be favored based on the formulas in 105(h) and 1.105-11. If an employer imposes different probationary periods but can still pass these tests at any point during the plan year, the plan is safe. Incidentally, all of the IRS examples in 1.105-11 address the requirement of eligibility with regards to 1.105-11©(2) only. It makes no mention of the supposed “blanket statement” in 105(h).

They can legally pocket the forfeitures. I'm not completely sure of the reasoning behind the original question, but it does not state what the final experience gains are ultimately used for, and doesn't state that experience gains are for the employer or the participants. It's possible that alexa48 was not sure if he/she (I assume she) should only take forfeitures minus costs in order to come up with the amount to return to participants, if that's what they do, or if the amount should be calculated by taking forfeitures minus costs and losses. I don't think the question is in left field.

FSA forfeitures can be returned to participants, or can be used to increase the amount available for reimbursement in the next plan year. There are many options. Alexa48 was wondering if the raw forfeitures could be used to offset losses before then addressing what to do with the experience gain.

If anyone, regardless of age, makes at least $400 in self-employment income in a year (this would include lawn mowing, etc.), then Forms 1040 and SE must be completed. If the child earns less than $400, there is nothing to file with the IRS. Just keep good records of the earnings for the child. Receipts are ideal.

If the $40,000 that went into the account was comprised of entirely tax-deductible amounts (this assumes the IRA is a traditional IRA), then the balance is taxable income to the participant, regardless of the amount in the account. Whatever is in there is untaxed dollars. Any non-deductible contributions, however, can be used to raise the basis in the account.

I've done this very thing for my daughter. Her income was too low for most mutual fund minimums, even the lower IRA minimums. Yes, some custodians do have an age limit, so that further limits your choices. The Capstone Group of funds was my best choice. $200 minimum, no age minimum, a low $2 annual IRA maintenance fee, and access to index funds with low expenses (not as low as Vanguard, but not bad).

This is an interesting one, and I can certainly see your interpretation, Mary C. The regs do say that in the case of DCSA's the cost change must be imposed by a "day care provider who is not a relative." However, assume a child is 12 years old and in day care. The parents decide that the child is old enough to be at home without care, and stop day care, so there are no more expenses. Both parents still work, and the child is still technically eligible for day care expenses. Since the child has not turned 13, there is no loss of eligibility, so I suppose you could still force the employee to continue the DCSA. You convinced me. It still seems strange, but it does seem to be written in a way that it would prevent this change. Sorry, Elijah. Since there is no uniform reimbursement requirement with DCSA's, I see no reason why the IRS would not want to allow someone to stop a DCSA if they voluntarily pull their child out of day care. Perhaps the IRS just wants to be sure that every kid under 13 is in some form of day care. Big brother is indeed looking out for us.

1.125-2 Q-7 (B)(7) states, "If a health FSA has an experience gain with respect to a year of coverage, the excess of the premiums paid and income of the FSA over the FSA's total claims reimbursements and reasonable administrative costs for the year may be used to..." The ensuing Example then goes on to clarify that this is done in total, for all the accounts of participants. This would mean that your statement is correct that, "It appears to at least me, myself & I, that Proposed Reg 1.125-2 Q&A 7 allows one to offset health FSA forfeitures by claims of those who underpaid (e.g. a terminated employee who utilized max of $ 2500 and only put in $1,200)." Your distinction is already hidden in the math, and is already accounted for. It's just total premiums minus claims and admin costs. That's the experience gain. Plan docs really should use the phrase experience gain when it's talking about the bottom line in a plan, since it typically refers to an amount increased by income and decreased by admin costs. Forfeitures usually mean total premiums minus total claims, and is the figure before the adjustments.

Elijah, you are correct. The cost decrease rule should allow you out of the DCSA as long as you notify HR of this change within the time frame alloted in your plan document. It won't help with the deductions taken previously, but it will help going forward.

Significant premium increases would allow an employee to change to a lower cost option offered by the same employer or to drop coverage if nothing similar exists. That would be fine if there is other coverage already in place (i.e., dual coverage). If there isn't other coverage already in place, the provision can't force another plan to pick up the people dropping coverage. The provision is still useful, it's just not as sweeping as you'd like.

Try this for starters: http://www.benefitsattorney.com/links/Inte...evenue_Service/

The TPA is correct. This rate increase might be enough for the employee to drop coverage for the spouse if he doesn't want to pay for the big increase, but this would be a voluntary drop. As far as then going on her employer's plan, HIPAA offers no mandatory avenue for this.

A 125 can pick and choose which family status changes it wishes to allow into the plan, but it must be in writing. If an employee calls within the time frame and makes HR aware of the fact that his/her spouse is no longer employed, I think it is HR's responsibility to ask the proper questions if they are doing their job well, but I don't see anywhere that they are legally required to. Even though the employee did not ask specifically about the DCSA, HR should make that leap and think of any affected benefits. For instance, say an employee calls HR and says that his/her child graduated and is no longer a full time student, with no mention of actual benefits. You can bet that HR will talk to the employee about removing the child from the health coverage without even being asked. Flex benefits take a back seat, when they shouldn't. At the same time, I don't think you could say this was an administrative error on your part and the employee should be able to drop the DCSA. If the employee asked to drop the DCSA and you didn't, that would be an administrative error.