PhilB

Does anyone know if it is permissible to change or modify Plan Names without changing Plan Numbers on the 5500 filing? This would be done as a result of a merger of 2 plans that resulted in a different classification of employees being transferred to the plan that will survive the merger, thus rendering the name of the surviving plan inaccurate. For the terminated plan, I will file a final report since all assets were transferred out. I have not found anything to suggest that changing a plan name with an existing plan number can't be done, but thought I would check in and see if anyone knows differently. Thanks for any replies!

My company is a hybrid entity under HIPAA - we are a plan sponsor, administrator, and operate an on-site clinic. In the past, our administrator unit has shared information relating to employees' medical conditions with our medical department so thatthey would have up to date information in the event of a work related medical emergency. Is this type of information considered PHI or would it fall under "employment records" (such as the emergency health information forms many employers have new employees complete?

I haven't been able to find a regulation or opinion on the following two situations: 1. Employee's work hours drop below minimum required in DCSA SPD. 4 months after the fact, employee calls wanting to drop from the DCSA. Our benefit plans have an automatic loss of coverage provision that terminates participants due to loss of eligibility (i.e. divorce, dropping out of school, working less than the req'd number of hours, etc.). My understanding is that the IRS has informally remarked that no election change request by the participant is req'd. The rationale is that the initial election for coverage already encompassed the concept of cessation-and so no "change" is needed. Where the event is discovered after the fact (i.e. after the 30 day window stipulated by our SPD), we are able to terminate coverage retroactively to the date of the event and refund associate contributions on an after-tax basis (consistent with the impossibility standard). Therefore, we can drop her from the DCSA as of the date she ceased to meet the eligibility requirements and refund on an after-tax basis any contributions she has made since then. The problem? She's submitted and been reimbursed for claims incurred while she was still considered a covered employee. We could request refunds back to the date of loss of eligibility and then pay the contributions back to her on a post-tax basis. Seems like a lot of work for almost the same result, but can't find any informal rule that allows us to just terminate her participation as of the last payroll or date she notified us of the reduction in hours. 2. Employee's spouse loses job, two months later they tell us about it. Spouse is not working so they take the kids out of daycare. We can terminate DCSA due to above mentioned automatic loss of coverage provision. Now they want to know: 1) if the DCSA can remain active (even though their kids are not in day care) so our employee can keep getting payroll deductions and they can make up the money that they are behind and then drop the plan (apparently the expenses incurred were more than they elected) or 2) if they can't do that, if spouse gets a job in the future, can he enroll back into the DCSA in order to make up the money even if they don't put the kids in day care at that time (to get out the money that they already contributed). My answer to both of the questions in the second case was no, as the DCSA is there expressly to pay for dependent care expenses while the parents work, look for work, or go to school, not to make up for shortfalls in expense planning. Thoughts? Comments? Opinions?

Is life insurance subject to HIPAA's Special Enrollment & Nondiscrimination requirements? I find that HIPAA applies to group health plans (defined as a plan that pays the cost of medical care) and exempts accident, disability, liability and workers comp insurance. Based on the definition of group health plans, I was not going to include the Special Enrollment & Nondiscrimination language in the life insurance section of our SPD, but it seems strange that it wouldn't have been listed as a specific exemption.

That's just what I was searching for - Many, many thanks! Do you think the same would apply as far as QMCSOs?

30 days.

You boiled that down very nicely Sandra, thank you. Let me throw one additional variable into the mix. In the second case, the employee's spouse was not employed at the time the employee originally signed up for coverage, so there was no spousal premium and the spouse was covered under our plan. Now they tell us that 4 months ago he became employed and she wants to drop him from our coverage. We don't allow that because its more than 30 days after the event. But - what about the spousal premium? He's now employed, we won't let him drop our coverage, but he has insurance available through his new employer - So do we start charging the spousal premium prospectively or leave that go until next plan year. Our plan doesn't reference the premiums per se in the status change events, and it's a bit of a backhand to charge them the additional premium since we can't allow them out. Any opinion?

Thanks papogi - Can you cite something specific so I can find that language in the HIPAA regs?

I am currently revising my company's SPD for CO-OP students, to whom we offer employee-only medical coverage while they are employed here. I know that I need to keep the HIPAA special enrollment provision in the SPD. My question: Since the coverage is available only to the CO-OP students (not to the employee's spouse or dependents), can I modify the HIPAA language to take out references to special enrollments for the spouse and dependents? Also, I'm curious what we would be required to do if we received a QMCSO on one of these CO-OP students - would we be forced to cover one of their dependents? Any input appreciated.

My company imposes an additional "Spousal Premium" on employees who elect medical coverage for working spouses that are employed elsewhere and have insurance coverage available through their own employer, but elect to take coverage under our plan. This is done to protect our plan from being selected against. The spousal premium is taken with pre-tax dollars. Two cases have arisen that I am seeking opinion on, both dealing with Section 125 issues and mid-year election change requests. Our SPD states that we must be notified within 30 days of a qualified status change event or else the employee must wait until open enrollment to make changes. In the first case, an employee is paying the spousal premium and did not notify us within 30 days that his spouse is no longer employed. The question is whether we can allow them to discontinue paying the spousal premium prospectively or, because the premiums are taken on a pre-tax basis and they did not notify us within 30 days of the event, do we need to wait until the next plan year begins? In the second case, an employee called in the last week to tell us her spouse became employed last March and was eligible for coverage in the other employer's health plan. They wanted to drop the spouse from coverage in our health plan and discontinue paying the spousal premium. We can't allow them to drop coverage because it is outside the 30 days stipulated by our plan. But, can we allow them to discontinue paying the spousal premium prospectively if he enrolls in his own employer's plan given our status change guidelines with respect to Section 125? I love these gray areas. Any input appreciated!

Sandra - Prospectively even though they inquired about dropping the DCSA after the 30 days had elapsed? Or do you mean you would have allowed them to drop it prospectively at the time they first called? Our issue is that they didn't ask, we didn't ask, so nothing happened in regard to the benefit. Now they want out, but my gut reaction is to deny the request because I have a sense that they were hedging their bet, but it didn't work out the way they anticipated. Assuming I'm right about that (and how could I ever know for certain), it really wouldn't be different from someone who anticipates having surgery and elects to participate in a HCSA, only to find later in the year that they cannot have the procedure performed. They would be stuck. The big difference here is that they can't use the money for anything else besides day care expenses.

Interesting....... Not sure I've seen it handled that way before, but I'm not really sure what other plans do in this type of situation. For example, my understanding of the allowable election changes for DCSA is that if a spouse commences employment, the employee could make or increase their DCSA election to reflect new eligiblity under the plan. Of course, plans don't have to allow any exceptions, but I'm not sure what the school of thought is on whether you can pick and choose among the allowable exceptions you accept into your plan. In any event Mary, I'm curious how you handle this from an administrative standpoint. It sounds as though you term the DCSA as of the status change date to prevent an employee from submitting expenses incurred after the status change (and loss of eligibility for participation in the plan). But since you don't allow them to drop the plan (due to failure to notify you of the status change in the required time frame), do you continue to deduct monies on a pretax basis from the employee's paycheck? I'm also curious about our responsibilty as a plan sponsor in this situation (just trying to cover all the bases here folks!). The employee called us within the 30 days stipulated by our plan to inform us her spouse was no longer employed, but did not request to drop the DCSA. Presumabaly this was because he is in a layoff situation and expected that he might be called back, but that hasn't happened thus far. They are now past the 30 days since the event, realize this may go longer than they thought, and now want to term the DCSA. Was it our responsibility as the plan sponsor or administrator to term the DCSA (due to lack of eligibility) or at least ask the employee at the time the employee called to inform us of the status change?

papogi and Mary - Just so I am clear on what you are saying - The 31 day notification rule (or in my situation, 30 day notification rule) should be adhered to even if as a result of the status change the employee and spouse no longer meet the eligibility criteria specified in the SPD (and the IRS)? In other words, even though both parents are no longer working (or looking for work and therefore do not meet the eligibility guidelines for our DCSA), they cannot drop the DCSA because they did not notify us within the 30 days stipulated by our plan? I don't have a predetermined answer here, just trying to get opinions on another seemingly gray area in the regs - I am thinking in terms of the eligibility comment Sandra made above specifically.

I have a situation similar to this I am grappling with right now: Our employee's spouse lost his job on 4/24/02 and they called us on 5/8/02 to let us know that they wanted the working spouse premium dropped (We charge an additional minimal premium if the spouse is employed and eligible for insurance through their own employer but takes our coverage instead). At that time, they did not say anything about making changes to their Dep Care Spending Account. Per the employee, they kept the kids in daycare even though her husband was not working, but now it looks like her husband will be off of work for quite a while so now they want to take the kids out of daycare and the employee wants to know if they can drop the DCSA. They did call us within 30 days (as required by our plan) of the spouse losing his job to request that the working spouse premium be dropped, but they did not mention the DCSA at that time. Our plan stipulates that care must be provided to allow you and your spouse to work or look for work. My question is, are we allowed to keep the employee enrolled in the DCSA if they are "not" BOTH working (which is normally one of the eligibility requirements)?

Talk to DOL and you find out more than you want to know. DOL has told me that not only do we have to file a 5500 as an employer plan, but also as a Master Trust entity, also with a Schedule D. And depending on the nature of the funds within the Master Trust, we could end up filing separate 5500s for all of the investment funds. All in addition to our plan filing - all in the name of administrative simplification. Yikes!

I called the DOL in DC - They require employers to list EVERY investment for the pension/401k plan(s) throughout the plan year (INCLUDING mutual funds), even if there are zero dollars in the investment as of December 31, as well as the dollar value of interest applicable to each investment as of December 31. I was also able to clarify a misunderstanding on my part: that the term "interest" - which I took to mean the return on investment - is actually the total financial stake in a particular investment. In other words, the total dollar value of the fund (principle plus any investment earnings) at year end.

I have heard that the 5500 paper forms have been deliberately delayed to encourage more companies to file electronically. I also use Relius and had loaded the new software at the end of March.

One other question: Line e (Dollar Value of interest) would seem to be the same number as line 1c(11) in Schedule H - But can you use the aggregate dollar interest at year end or do you have to use the interest specific to the investment for each collective trust?

I recently received a DOL notice requesting that my company file a Schedule D for the 2000 plan year as the preparer last year specified on Schedule H that our plan(s) contain DFE assets. I have the collective trust information. My question: Do we need to list all funds that held assets last year or only those that held assets as of December 31, 2000? Also, I have heard that investments in mutual funds do not have to be listed - true? Both of these pieces of information came from the Trust Company who files Part 2 of Schedule D.

MY company has numerous health plans in place that provide for an extension of medical benefits in disability situations. It has been the company practice to run the extension concurrent with COBRA. As an example, if an employee goes out on STD or LTD, medical benefits are extended up to the maximum period of disability coverage - and COBRA runs concurrently. However, it has been their practice to send out the COBRA notice AFTER the extension runs out, with only the remaining COBRA coverage period available. So, if an employee is out on STD for 26 weeks, the medical benefit is extended, and at the end of the 26 weeks, a COBRA notice is sent stating that they may elect up to 12 months of coverage under COBRA (the first 6 having been used during the extension and the cost covered by the company). In the case of LTD, they might NEVER send a notice if the extension runs longer than the COBRA coverage period. In addition, it isn't stated anywhere in the SPDs thast we are running COBRA concurrent with the extension of benefits. The reasoning is thus: "The law gives employers the right to run COBRA concurrently with extended coverage. That being the case, its not necessary to restate those legal rights in the SPD. There are innumerable examples of where administrative procedures are not stated explicitly and it doesn't compromise the exercise of those rights." I'm concerned over the lack of language in the SPD and the late notices........am I off base here? Any regulations regarding these specific items?

So, you're saying that if the premium payment is unaffected, the employee could add any number of additional dependents without this being a section 125 issue?

The dependent wouldn't be newly eligible (he could have been enrolled before) and the lose of coverage was not through another employer, so I'm still not certain if this would qualify in any way as a status change allowing the employee to enroll the dependent.

I have a somewhat related situation. An employee elected family status but did not cover a dependent who was away at college because "the child has insurance through the school". I suspect the "insurance" might really be free health services, but in any event, the employee now wants to add this child to his family coverage because the child will be home for the summer. The premium isn't an issue because the employee is already paying the family rate. However, I can't find any rule that would allow this dependent to be added based on a status change. Anyone know differently?

The explanation that I have been provided is that with employer provided group-term life insurance, if you apply the imputed income rules the death benefit is tax free regardless of the Pre-tax / Post-tax employee contribution decision. If employee contributions are taken on a post-tax basis it would simply reduce the amount of imputed income.

Is that another way of saying that because the employee premium is pre-tax, the doctrine of constructive receipt (or rather, lack of constructive receipt) applies to the amounts over $50,000? In essence, the premium payment is considered to come from the employer, therefore the life benefit is not taxable -Or am I missing the boat completely? Does anyone know of a good understandable source that explains the imputed income concept?