Christine Oliver

Wondering if anyone has thoughts on my April 29th post?

We are a university with a 401(k) Plan. Adjuncts are excluded, however, their hours worked matter for vesting purposes should they become eligible to participate in the plan (Adjunct to full-time faculty or staff). My understanding is that the 401(k) regulations do not expressly allow you to use the ACA calculation for purposes of a 401(k). Is that accurate, and if so, it seems there are no options aside from crediting them with a full equivalency, which is not reasonable. Am I missing something?

If you typically don't have a lot of full-time to part-time status changes, you can also choose not to continue coverage and count them against the 95% coverage threshold, correct? I understand that doing so could cause you to incur an affordability penalty.

Thank you, Brian. This is a brand, new vision plan (never had one before) so we are not offering to current COBRA participants.

Do employers have to offer a new vision plan (effective 1/1/25) to all current COBRA participants or only to those who become COBRA participants following the implementation of this new plan offering?

Thank you, Brian.

Thanks, Chaz, for clarifying my question better than I did!

Thanks, Brian, but just to be clear, I understand that dependents have independent election rights, but I'm asking if they can drop COBRA coverage once elected, mid-year, for any reason.

Can a COBRA participant discontinue coverage for a dependent beneficiary mid-year without a qualifying event and continue their coverage and other dependent beneficiaries. If no, is this specified in the COBRA regulations?

Follow up question. The TPA is reimbursing the plan sponsor for the eligible reimbursement made on the day after the participant's date of employment separation. Based on my review of the IRS guidance, do I understand correctly that this is a sufficient "correction" and we do not have to apply the amount to the participant's taxable wages?

Yeah, not sure about taking that risk. What strikes me is that I can't imagine this is not a problem for plan sponsors and TPAs (i.e., eligible claims reimbursed between separation date and status update in TPA system). I suppose it may go unnoticed. I also can't think of a way to completely prevent it from happening. Thank you for your prompt responses.

Thanks, Brian. I follow and read your excellent compliance articles/blogs, including this particular one, which prompted my concern about the TPA's responses! So, do I understand correctly that unless the cafeteria plan specifically allows for eligible expenses incurred through the end of the month in which the employment separation occurs, these situations are impermissible, and we must include improper reimbursements in the employee's taxable income as doing otherwise could risk IRS disqualification.

Plan sponsor inquiry: Scenario 1: We learned of a qualified FSA expense incurred and made to a participant after date of employment separation due to lag time between the weekly file feed to FSA TPA with employment status changes and TPA updating their records. While we may sometimes know in advance of upcoming employment separations, that is not always the case. Our TPA is telling us that this is not necessarily a violation of FSA regulations and is comparing it to situations where participants use all their FSA funds prior to separation of employment and complete funding of their election. That doesn't sound right to me. Assuming it's not right, are we required to include the improper payment in the former employee's taxable income subject to withholding and payroll taxes in these scenarios? If yes, how is this done when there are no additional wages to take the withholding/payroll taxes from? Scenario 2: FSA TPA fails to terminate FSA account upon receipt of file feed with separation date (error is caught several weeks later). TPA will refund us for any improper reimbursements, and is advising that because it is their error, we have no obligation to include improper reimbursements in the former employee's taxable income. Given our understanding that the plan sponsor has ultimate fiduciary responsibility for proper FSA administration, including monitoring the TPA, this, too, doesn't sound right to me.

Does your answer change if this was an employer approved non-FMLA leave, and the plan document states that employees remain eligible for benefits while on an employer approved leave of absence? I don't think it does, but I want to be sure that there are HCFSA regulations that supersede the plan document language?

Thank you!