Lisa Hand

Yes, it is to treat and correct a medical condition - your poor eyesight, just like glasses, contacts or cataract surgery are eligible. Just a side note: if you plan to do any mountain climbing or other high altitude recreation, carefully check the procedure you are looking at and question your eye specialist about the effects at altitude. One of the climbers on Everest in 1996, Beck Weathers, had a majority of his problems because the RK surgery had rendered him almost blind at altitude.

Pets are not "dependents" under any defination in the IRC (even though we often think of them as family), therefore "pet insurance" would not be an eligible expense for a Section 125 Plan

First, the insurance must be group term life, no benefit which build value and carries it forward may be included in a Section 125 Plan. Then the premiums are only eligible for pre-tax treatment (IRC, Section 79) for up to a total of $50,000.00in benefit. This number include any amount provided by the employer. For example, the employer provides a base benefit of $30,000.00 in group term life, the employee could purchase an additional $20,000.00 of coverage and their premium could be pre-tax through a Section 125 Plan. However, no amounts above $50,000.00 of coverage are eligible. So depending on how rich your basic benefit is, you may or may not be able to pre-tax the additional premium.

HIPAA exception was grated for most Health FSAs in December 1997. Therefore, this quetion may be more appropriately posted on the Health plans message board. I did look up the basic information forwarded when HIPAA was enacted and what it said reference to your question was: "With certain exceptions, (the effective date is delayed for certain collective bargained palns.) effective the first plan year beginning on or after July 1, 1997, pre-existing condition exclusions: i) are limited to conditions for which medical advice, diagnosis, care or treatment was received within six months prior to the enrollment date (for this porpose enrollment date means the earlier of the effective date of the coverage or the beginning of any applicable waiting period); ii) cannnot apply to pregnancy-related expenses; iii) are limited to 12 months (18 for late enrollees)..." The 12 month period is the "look forward period for the exclusion. [Note: This message was edited by Lisa Hand]

The husband's hire, or rather his eligiblity for benefits upon hire is a change of status event regulatory authorization - 1.125-2 QA-6©(1989) as well as 1.125-4T(1997). As far as the son goes, if he is a dependent then the change of status rules in regard to change in residence or worksite of employee, spouse or dependent would apply. You should also check your plan documents to see how specifically change of status is defined and if your plan permits this change.

Is the son recently adopted? If not please define "son comes into the US as an alien".

You might want to check the yellow pages on BenefitsLink for companies which provide this benefit. The cost of a plan is normally based on the size of the company. "POP" plans are subject to the same testing, anti-discriminatory rules and annual reporting requirements as plans with flexible spending accounts. I would be happy to discuss specifics for your company. I can be reached at 1-888-264-2717.

You might want to contact Data Path in Arkansas at 1-800-633-3841. They have software to administer a Section 132 benefit. Remember this benefit can not be run through a Section 125 plan.

Additionally, 125 Plans are required to be non-discriminatory and must pass that test. They must have a written document which is adopted by the company and are required to file the annual Form 5500. You might consider working with a TPA who specializes in these plans to insure compliance.(BenefitsLink yellow pages is a good place to look) Many insurance agents and companies think POP plans are "no-brainers" and an easy way to sell their products, however; the IRS will fine you just as fast for non-complaince with a POP as with a full Flexible benefits plan. Often the sponsoring employer (who is responsible for compliance)finds this out the hard way.

As long as enrollment forms of for the Cafeteria Plan states that the premium amounts will be automatically adjusted should the premium cost change and it is apllied on the "reasonable and consistent basis", then there should be no practical problems. We have not seen any in our client companies. If it is a great concern or confusion then the open enrollments can be changed to coinside. As far as changes in health plans, other than during the open enrollment, most group plans only permit changes if there is a valid change of status event which usually applies as well to the Cafeteria Plan. Finally,if an employer is not applying the change of status rules to their 125 Plan, they have significantly greater problems than when their oepn enrollments for the different plans happen to be. Unless their 125 plan document specifically states they are not including the change of status rules and then there are some concerns about complying with HIPAA and FMLA.

According to Proposed Treasury Regulations 1.125-2, Q/A-6(B)(1),"If the cost of a health plan provided by an independent, third-party provider under a cafeteria plan increase or decreases during a plan year and under the terms of the cafeteria plan, employees are required to make a corresponding change in their premium payments, the cafeteria plan may, on a reasonable and consistent basis, automatically, increase or decrease, as the case may be, all affected participant selective contributions or after-tax contributions for such health plan."

Darla: since we are not permited to advertise on the message boards, I would suggest that the BenefitsLink yellow pages under Cafeteria Plans would be a good place to start. Lisa Hand

Whether Plan Docs need revised or not depends on how specific they are. Plan docs should be reviewed and if they are extremely specific on for example listing all "family change of status" events then they probably need revised to properly reflect the new "change of Status" definitions. It is probably better to be more general in the wording of the docs when they are adopted. Regardless of laws changes, it is a good idea to reveiw plan docs at least annually to insure complaince and continuing fit to corporate needs, that is what we do with our clients.

Dawn: Give me a call at 1-888-264-2717 to discuss your questions.

While a manager at a Fortune 500 company, I was the project manager for our relocation to a new and larger facility. 7 miles is not a great distance (depending on where you are located) and should not be a significant problem if you utilize some effective change management. The above suggestions are great for improving on-going work environment. For the actual move consider the following. 1. Get the employees' input for the new facility - 2. since you are growing fast, the current space is crowded and does not meet your needs - do a survey for improvements for the new space and publish results with the suggestions that are being used. 3. Form moving teams with supervisors from each department in charge to work with the project manager and the moving company 4. Let the employees select the artwork - we had a theme and then passed around books of available posters and each section selected what would go in their area. 5. Have a project manager - this is a full time job. 6. KEEP EVERYONE INFORMED!!!! - even though it is a good thing to move to a better and bigger space - lots of people hate change. The more informaiton they have, the better they feel about the process. With the employees involved, informed and part of the process, we moved on time and under budget. Good Luck.

See the next posting [This message has been edited by Lisa Hand (edited 09-02-98).]

Robin- to clarify the earlier message on the greater than 2% shareholder issue. A PC maybe structured as a corporation or as an S corp, if it is a S corp then the greater than 2% rules apply. The situation for corporations has already been addressed.

IRS Publication 502 would be a good place to start for unreimbursed medical expenses and Publication 503 for dependent care expenses.