Linda

The same type of issue can come up with a 125 plan. It was included in a published list of questions (from some national group) posed to the IRS awhile back, but I have not seen an IRS response.

You can’t use the DOL delinquent filer voluntary compliance program for a 125 plan. A 125 plan files a Form 5500 as a fringe benefit plan under the IRC. The 125 plan is not itself a plan subject to ERISA. But, as mentioned above, the IRS had been receptive to accepting Form 5500s for 125 plan under these circumstances.

You have a QE only if there is both (1) a loss of coverage under 54.4980B-4 Q&A-1©; and (2) an event described in 54.4980B-4 Q&A-1(B) (i.e., termination of employment, reduction in hours, divorce etc.). So, when an employee transfers from PT to FT, he has a loss of coverage but does not have an event described in 54.4980B-4 Q&A-1(B). Since the employee does not have both (the loss of coverage AND the event), he does not have a QE.

I agree that switching from FT to PT would be a QE but I do not think switching from PT to FT is a QE. COBRA is available for a loss of coverage in connection with a termination of employment or a REDUCTION in hours. A switch from PT to FT is an increase in hours.

Try 45 CFR 146.180.

But isn't the maximum benefit the amount elected plus the tax savings?

Could you tell the DOL that the employee’s contributions bought coverage under the 125 plan? In other words, the employee has received coverage throughout the year, even if benefits actually disbursed were less than the cost of coverage.

54.4980B-7 Q&A-3.

If the individual enrolled in COBRA first and Medicare second, COBRA ends when the individual enrolls in Medicare (regardless of the reason). If the individual enrolled in Medicare first and COBRA second, the individual can carry both Medicare and COBRA. If the reason for Medicare is ESRD, then COBRA will be primary to Medicare for the coordination period (30 months).

Under the DOL’s new claims regs, I understand that a provider can force a group health plan to treat a “pre-service health claim” as “urgent.” But what about a plan that does not have pre-certification requirements (or other requirements for advance approval)? Can a provider force a plan to adjudicate a claim within the 72 hours, where the plan does not have penalized the participant for failure to get advance approval? Any insight as to how the claims regs might fare under the Bush adminsitration? Should we still expect to have to comply in 2002?

See the Preamble to the new regs on the content of summary plan descriptions. Here, the DOL repeats its position that the initial notice should be mailed to the employee's home, addressed to the employee and spouse. If you want (but who does), you can mail the SPD which includes the COBRA information. Otherwise, you mail the initial COBRA notice.

Do you happen to know the scope of the KPMG opinion?

This can be handled either way. If you give the notice now, she will get get 18 months from the end of the FMLA leave -- 2 months paid by the company and 16 more months at her expense. If you wait to give notice, she will get 20 months from the end of the FMLA leave -- 2 months paid by the company and 18 more months at her expense. You probably want to establish a policy and make sure your insurer/stop-loss carrier is on board.

Right. A POP is a fringe benefit plan under IRS 6039D but is not a "plan" subject to ERISA. (That's why a POP files a Form 5500 with the IRS but not the DOL.) Instead of a separate SPD, you may want to describe the POP as a feature of the underlying benefit.

A problem I used to worry about with this sort of arrangement was whether a multiple employer welfare arrangement was created. However, a few months ago the DOL published some Q&As on MEWAs that allow a seller to continue to cover its former employees without creating a MEWA.

A technical point -- a premium only 125 plan is not a plan subject to ERISA. So, the SPD rules do not actually apply to a POP. Of course, the SPD rules apply to the underlying program for which contributions are made (i.e., medical, dental, LTD, life insurance).

I'm guessing some of the claims that should have been paid by Medicare were inadvertantly paid first by the group health plan. If the dual coverage had been proper, Medicare would have been primary (unless the individual had ESRD). Could you try to get this re-processed with Medicare?

Most EAPs are group health plans. It depends on the benefits offered. So, a Form 5500 is required if 100 participants are covered. (Of course, the EAP could be bundled with a medical plan on one Form 5500.) Now here is my pet peeve -- the application of COBRA.

Is the proposal to charge HCEs 10% of the premium and NHCEs 20% of the premium? Or is it 10% coinsurance for HCEs and 20% coinsurance for NHCEs? Either way, it looks like you have a discrimination problem. Is the group health plan fully insured (i.e., not self-insured)? If your group health plan is fully insured, you could exclude the HCEs from the 125 plan. That means no premium contribution or an after-tax premium contribution from the HCEs. Then, the 125 nondiscrimination rules no longer apply.

The employer is out of luck. The difference cannot be recouped.

1. Self-insured plans are not required to offer conversion policies. State laws don’t apply -- ERISA preemption. 2. Yes, some self-insured plans do choose to offer conversion policies. 3. I’m guessing an employer might want the conversion policy to be available to help a former employee in a truly desperate situation (although, post-HIPAA, there should be some other “desperation” options). I think an employer typically has to pay something to the insurer to make conversion coverage available, the coverage is not very good, and very few employees use it. However, extending COBRA would be expensive because of the negative experience on COBRA beneficiaries. I suppose after the minimum period, an employer could raise the rate.

Another point...I do not think you want to attach a Schedule A for the stop-loss policy unless (and this is not the usual situation) the stop-loss policy is owned by the plan or a plan trustee.

KJohnson, thanks for the cite to the preamble to the regs. I was not aware of the discussion in the preamble so reference was very helpful. Despite the preamble, do you know if it is a more or less normal practice for the recipient plan to treat as its geographic area the locations of the employers from which contributions are transferred?

Under a dollars follows the man reciprocity agreement, can transferred hours be treated as Section 203(a)(3)(B) service (i.e., the basis for a suspension of a retiree’s pension from the home plan)?

Here is a very general rule of thumb: Pre-tax contributions do not have to held in trust but after-tax contributions are supposed to be held in trust (unless associated with a cafeteria plan). You’ll want to look at ERISA Technical Release 92-01.