Linda

HIPAA has some specific rules on the inclusion or exclusion of dental plans. See ERISA Section 706©. In my experience, most dental plans meet the requirements to be excluded from HIPAA.

Could you explain a non-qualified MSA? I am not familiar with that term.

I think I have run into the same issue. Under 152, dependent status is based on whether the partner lived with the employee for the year and got more than ½ of his or her support from the employee during the year. In other words, the determination is made at the end of the year. However, the determination as to whether health insurance benefits for the partner are taxable needs to be made at the beginning of the year. Looking at a prior year tax return does not resolve the issue for the current year. So, you may end up having to amend a Form W-2. How have you dealt with this?

If the "selling group"(the controlled group of corps including the seller) has a group health plan after the sale, the selling roup is responsible for COBRA. See Prop. Reg. 54.4980B-9 Q&A-8(a). It doesn't have to be the same plan which covered the sub's employees before the sale.

Yes.

The parent company is responsible for COBRA. See Prop. Reg. 54.4980B-9 which deals with this situation. (The regs are not final but they give us the IRS interpretation of COBRA.) Check the preamble too -- the parent company will want to send COBRA notices to both the employees who don't get jobs with the buyer and the employees who do get jobs with the buyer. The regs permit the parties to contract for a different allocation of COBRA responsibilities, but if the buyer fails to perform, the responsiblity reverts to the seller.

Payment of unreimbursed medical expenses for the HCEs is a problem under 105(h).

Technically, if your EAP provides mental health counseling (i.e., it's a group health plan), it is subject to COBRA. But I think this is widely ignored. I sent a comment letter on the COBRA regs, asking to exclude de minimus EAP benefits at least in the situation where a qualified beneficiary has no other group health benefits from the employer. I don't know whether the IRS will consider an exclusion. (The IRS may think this would require an amendment to the statute.) Even though the comment period on the COBRA regs is over, maybe you could send a letter too, if you think it might help.

It may turn out to be an issue under the nondiscimination rule of HIPAA. In the preamble to the HIPAA regs., IRS/DOL/HHS asked for comments on discounts for nonsmokers.

The scope of a COBRA audit can vary. Generally, I look at a company's notices, election forms, any written procedures and the group health plan SPD(s). (I don't necessarily need to read an entire SPD but I like to see the context of the explanation of COBRA and how COBRA is coordinated with other extensions of coverage the company might offer.) A COBRA audit would also include conversations with the staff about their practices and difficulties. Often, a COBRA audit is part of a larger project involving an audit or redesign of a company's group health plan. I think it is a good idea to revisit COBRA forms and procedures this year in light of the new COBRA regulations which will be effective next year.

You may want to use an employee benefits lawyer for this. Make sure you are working with someone who knows health plans. (Some benefits lawyers seem to specialize in retirement plan issues.)

The insurer should provide the coverage, as per 54.4980B-1 Q&A-5. How is the insurer explaining the refusal to allow COBRA coverage? There is an excise tax under Code Section 4980B(e)(2)(b). You might also take the position that the refusal is a violation of fiduciary duty under ERISA. Perhaps if you were dealing with someone higher in the insurer's organization or with the insurer's legal department, you would get some cooperation.

According to Prop. Reg. 1.125-2 Q&A-7, a FSA must exhibit the risk-shifting characteristics of insurance in order to qualify as a group health plan under 105 and 106. I could interpret that as prohibiting the carry-over of a FSA balance past the "period of coverage." But as far as the length of the period of coverage, I think a non-125 FSA has some flexibility as long as the period of coverage does not "eliminate all, or substantially all, risk of loss." While a FSA under a 125 plan cannot have a period of coverage of less than 12 months, I don't think the same absolute minimum would apply to a non-125 FSA. So, I think a non-FSA could have a six-month (rather than a 12-month) period of coverage. What do you think?

I have a client that uses Bluff Head Enterprises, Inc., 105 Main Street Wakefield, Rhode Island 02879. Ask for Sam Slade, (401) 782-1250.

The 5/10 BNA Pension & Benefits Reporter had an article on the IRS hearing titled "Witness Urges Delay..." A representative of the American Payroll Association asked for a 1/1/2000 effective date but the article didn't say what the IRS will do.

Kip It sounds like you would like the new responsibilites under IRS Reg. 54.4980B-6 Q&A-3 and 54.4980B-8 Q&A-5 to be handled by the employer, not the TPA or insurer. If the employer and TPA or insurer agree to that allocation of responsibilities, do you think the TPA or insurer must make some disclosure in the course of a precert call to direct the provider to the employer as to COBRA status?

Is the data typically provided to a TPA sufficient and timely to allow the TPA to identify individuals in their COBRA election period or grace period for payment? I am under the impression that some TPS simply certify the coverage of e.g., a medical procedure but not the eligible status of an individual.

Have you heard whether the IRS will finalize the new Table I rates for GTLI with the July 1, 1999 effective date?