Brian Gilmore

Oh interesting. And I guess because it's a PC none are considered self-employed. That's an unusual one. But the silver lining is that they can just make the HSA contributions outside of payroll and take the above-the-line deduction in Schedule 1. True they miss out on the FICA exemption by not using the cafeteria plan, but that probably isn't very meaningful here since I assume they're all over the Social Security wage base for the 6.2%. So they're just missing the 1.45% Medicare tax exemption (and potentially the 0.9% additional Medicare tax).

Yeah the regs have been proposed forever, but that's all we have to work with given that the statute is generic. They're still easily accessible in the Federal Register: https://www.govinfo.gov/content/pkg/FR-2007-08-06/pdf/E7-14827.pdf The rules here piggyback on the coverage testing rules by imposing the nondiscriminatory classification test. Basically there's the safe harbor ratio percentage, and the unsafe harbor ratio percentage that requires the facts and circumstances test. See the table on page 3 here: https://www.govinfo.gov/content/pkg/CFR-2012-title26-vol5/pdf/CFR-2012-title26-vol5-sec1-410b-4.pdf I don't see how you could pass either with exclusively highs given that the applicable ratio percentage is is determined by dividing the percentage of non-HCPs benefitting from the plan by the percentage of HCPs who benefit. Seems to me zero divided by anything non-zero will always be zero. That's why I was saying the top-paid group (top 20%) approach would be needed and the easy workaround.

You wouldn't pass the reasonable classification portion of the eligibility test (i.e., the safe harbor percentage or unsafe harbor w/ facts/circumstances) without any NHCEs. That would cause the HCEs (everyone in this case) to lose the Section 125 safe harbor from constructive receipt (i.e., be taxed on their contributions). Prop. Treas. Reg. §1.125-7(b): (b) Nondiscrimination as to eligibility. (1) In general. A cafeteria plan must not discriminate in favor of highly compensated individuals as to eligibility to participate for that plan year. A cafeteria plan does not discriminate in favor of highly compensated individuals if the plan benefits a group of employees who qualify under a reasonable classification established by the employer, as defined in §1.410(b)-4(b), and the group of employees included in the classification satisfies the safe harbor percentage test or the unsafe harbor percentage component of the facts and circumstances test in §1.410(b)-4(c). (In applying the §1.410(b)-4 test, substitute highly compensated individual for highly compensated employee and substitute nonhighly compensated individual for nonhighly compensated employee). Prop. Treas. Reg. §1.125-7(m): (2) Discriminatory cafeteria plan. A highly compensated participant or key employee participating in a discriminatory cafeteria plan must include in gross income (in the participant's taxable year within which ends the plan year with respect to which an election was or could have been made) the value of the taxable benefit with the greatest value that the employee could have elected to receive, even if the employee elects to receive only the nontaxable benefits offered.

If everyone is $160k+ you would want to use the top-paid group (top 20%) election for the cafeteria plan, which I'm assuming they are already doing for the 401(k) (unless it is safe harbor). Then you would have NHCEs and therefore likely no issues. Prop. Treas. Reg. §1.125-7(a)(9): (9) Highly compensated. The term highly compensated means any individual or participant who for the preceding plan year (or the current plan year in the case of the first year of employment) had compensation from the employer in excess of the compensation amount specified in section 414(q)(1)(B), and, if elected by the employer, was also in the top-paid group of employees (determined by reference to section 414(q)(3)) for such preceding plan year (or for the current plan year in the case of the first year of employment). Treas. Reg. §1.414(q)-1, Q/A-9(b)(2)(iii): (iii) Method of election. The elections in this paragraph (b)(2) must be provided for in all plans of the employer and must be uniform and consistent with respect to all situations in which the section 414(q) definition is applicable to the employer. Thus, with respect to all plan years beginning in the same calendar year, the employer must apply the test uniformly for purposes of determining its top-paid group with respect to all its qualified plans and employee benefit plans. If either election is changed during the determination year, no recalculation of the look-back year based on the new election is required, provided the change in election does not result in discrimination in operation.

That's a tough one. First of all, there are quite a few exceptions to the M-1 filing requirements. Take a look here on page 8 (page 2 of the instructions) for a good summary to double-check none apply: https://www.dol.gov/sites/dolgov/files/EBSA/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/forms/m1-2024.pdf If none apply, it's harsh because (for inexplicable reasons) there's no DFVCP equivalent for the M-1. I'd suggest they work with counsel to see if there's any way they can back channel with the DOL to encourage them to come forward with some understanding they won't get hit with the full potential penalties. It would be quite difficult to just start filing going forward without addressing the prior years given that the rules require filing 30 days prior to operations. Good FAQ here: https://www.dol.gov/sites/dolgov/files/EBSA/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/forms/mewa-filing-tips.pdf

The HSA rules have little in common with the HRA rules because the HRA is an ERISA employer-sponsored group health plan. That said, HRAs are almost almost always unfunded notional accounts that are bookkeeping entries paid from the employer's general assets. In that overwhelming majority situation, there really isn't such thing as a mistaken HRA contribution. I suppose you could have a funded trust account HRA, which would be different. In that case there are probably plan/trust terms governing how to address overcontributions. It's possible you're referring to the much more common issue of mistaken HRA distributions. In that case, I recommend following the health FSA (not HSA) framework: https://www.newfront.com/blog/correcting-improper-health-fsa-payments

The ERISA preemption point is a fair one I think. There seem to have been decisions going both ways. This is a pretty strong case in the Fourth Circuit for your position @rocknrolls2: https://www.ca4.uscourts.gov/opinions/Unpublished/011232.U.pdf Jackson sued Wal-Mart under the South Carolina Payment of Wages Act, S.C. Code Ann. §§ 41-10-10 to 41-10-110 (Law. Co-Op. Supp. 2000), alleging that Wal-Mart made excessive deductions from his wages for insurance premiums...Because Jackson’s claim entails an inquiry into the terms and administration of the employee benefits plan to determine whether Wal-Mart deducted unauthorized amounts from Jackson’s wages, Jackson’s claim relates to the employee benefit plan. Therefore, we find that the district court correctly found that ERISA preempted the application of the South Carolina Payment of Wages Act. Nonetheless, no employer wants to have to litigate the issue of ERISA preemption of a state wage withholding law. There seems to be enough conflicting case law and general disagreement in the courts about how preemption applies to wage withholding laws to open at least the potential exposure--either from the state law itself or the cost to litigate its status under ERISA.

There's no doubt the excess has to be refunded. If nothing else, it would be a violation of state wage withholding laws to fail to refund. Probably ERISA fiduciary duties also implicated. The refund will be taxable income because presumably these amounts were initially pre-tax health plan contributions through the cafeteria plan. As to whether the employee has to be paid interest, that's a good question. I'm not aware of any guidance directly addressing the issue. As Peter noted, this is likely a very small amount anyway.

I'm not a fan as a plan design/strategy matter. It's a bit like enrolling employees into dual PPO/HMO coverage. I'd pick one and use that vehicle to accomplish the carrot incentive you're aiming for through the degree to which supports your goals/budget. In other words, instead of doing both, I would recommend increasing the amount available under either (preferably the SIHRA) as being more effective and understandable for employees. From a compliance standpoint, I think it works fine. The opt-out credit is a creature of the cafeteria plan, and the SIHRA is by definition not tied to the cafeteria plan. Each would operate independently from the other and not interfere with the other. But again, why? If they're at the point where a SIHRA is on the table, I view the SIHRA as the evolved (and superior) version of an opt-out credit. I don't see a good argument for keeping the opt-out credit at that point. Take the opt-out credit budget and put it into the SIHRA allocation for maximum effect/benefit. As Yogi Berra famously said: "When you come to a fork in the road, take it." Here's some more discussion if helpful: https://www.newfront.com/blog/ten-spousal-incentive-hra-compliance-considerations

Sure thing. It's definitely an issue, but of course that's an issue with lots of benefits. For example, the OBBB also made permanent and indexed the ability for employers to provide tax-free student loan repayment assistance under §127. That section of the code contains no mechanism to avoid constructive receipt, and it's specifically excluded from the cafeteria plan safe harbor per the cite you copied in the original post. So just like tax-free employer Trump Account contributions, tax-free employer student loan repayment assistance is exclusively an employer option. If the guy in the cubicle next to you has student loan debt and gets $1k from the company, and you already repaid your student debt, might some people perceive a mild unfairness in that? Employee benefits are riddled with similar forms of unfairness. Like the larger employer contribution to the health plan for families, or the fact that families with lots of kids pay the same as families with one. The hope is you touch enough bases that everyone feels satisfied with the employer's overall strategy, and that you've hit enough contingencies as an employer to drive your recruiting/retention demands. Some really big name employers expressed interest in making contributions to Trump Accounts before the bill passed, but we'll see whether that actually occurs when the rubber hits the road on 7/4/26. Those prominent names will drive a lot of the market forces in either direction here I think.

Not by my reading. Trump Accounts are a form of IRA, and IRAs are not a Section 125 qualified benefit. Furthermore, the cafeteria plan rules are littered with the prohibition of deferred compensation through a cafeteria plan, outside of the very limited and explicitly referenced 401(k) option with cashable flex credits. But even if I were wrong, there would be little benefit to including Trump Accounts in a cafeteria plan. The OBBB is clear that Trump Account contributions must be nondeductible. So there wouldn't be any way to use a cafeteria plan for a pre-tax TA contribution. I suppose it could be interesting as an after-tax flex credit allocation option, but very few employers offer flex credits. Here's my take-- https://www.newfront.com/blog/trump-accounts-as-an-employee-benefit Note that there is no option for employees to contribute through payroll on a pre-tax basis to TAs because they are not a Section 125 qualified benefit. Nor is there the option to embed tax-free TA contributions in a broader arrangement such as flex credits through a cafeteria plan or a lifestyle spending account (LSA). The constructive receipt rules prevent any tax-advantaged approach other than standard employer contributions. Here's a couple cites-- OBBB: (b) Trump account. For purposes of this section— (1) In general. The term “Trump account” means an individual retirement account (as defined in section 408(a)) which is not designated as a Roth IRA and which meets the following requirements: ... (c) Treatment of contributions. (1) No deduction allowed. No deduction shall be allowed under section 219 for any contribution which is made before the first day of the calendar year in which the account beneficiary attains age 18. Prop. Treas. Reg. §1.125-1: (o) Prohibition against deferred compensation. (1) In general. Any plan that offers a benefit that defers compensation (except as provided in this paragraph (o)) is not a cafeteria plan. See section 125(d)(2)(A). A plan that permits employees to carry over unused elective contributions, after-tax contributions, or plan benefits from one plan year to another (except as provided in paragraphs (e), (o)(3) and (4) and (p) of this section) defers compensation. This is the case regardless of how the contributions or benefits are used by the employee in the subsequent plan year (for example, whether they are automatically or electively converted into another taxable or nontaxable benefit in the subsequent plan year or used to provide additional benefits of the same type). Similarly, a cafeteria plan also defers compensation if the plan permits employees to use contributions for one plan year to purchase a benefit that will be provided in a subsequent plan year (for example, life, health or disability if these benefits have a savings or investment feature, such as whole life insurance). See also Q&A-5 in §1.125-3, prohibiting deferring compensation from one cafeteria plan year to a subsequent cafeteria plan year. See paragraph (e) of this section for grace period rules. A plan does not defer compensation merely because it allocates experience gains (or forfeitures) among participants in compliance with paragraph (o) in §1.125-5. (2) Effect if a plan includes a benefit that defers the receipt of compensation or a plan operates to defer compensation. If a plan violates paragraph (o)(1) of this section, the availability of an election between taxable and nontaxable benefits under such a plan results in gross income to the employees.

This is a great question. @EBECatty I agree with your analysis here. Normally we're looking at this issue from the Section 125 cafeteria plan perspective as to whether the individual can make pre-tax contributions. In that case, the cafeteria plan rules are clear that the the attribution rules do apply to also block eligibility for the spouse/children of the more-than-2% shareholder of an S Corp. This is done by specifically pointing to §1372(b), which in turn points to §318. In other words, even though the spouse and children may be employees of the S Corp, they are treated as self-insured for cafeteria plan eligibility rule purposes via attribution. They even have an example on the regs directly on point. In this case, the §4980H regs do nothing of the sort. Neither does the preamble or any other guidance I can find. It simply refers to a "2-percent S Corporation shareholder" with no section reference to §1372(b), §318, or anywhere else. Given that it's all we have to work with, I would read it to not include attribution--consistent with your original approach @Morgan. If the IRS wanted attribution to apply, they could have explicitly done so as they did with the cafeteria plan regs. If this vendor is firmly stating that they believe the spouse and children can be excluded from the ALE calculation based on attribution, I'd ask them for what guidance they are relying on. My guess is it's just the standard attribution rules that aren't incorporated by reference in the §4980H regs. I'd consider that an aggressive interpretation that could expose them to quite large §4980H and §6056 liability if the IRS disagreed. Prop. Treas. Reg. §1.125-1: (g) Employee for purposes of section 125. ... (2) Self-employed individual not an employee. (i) In general. The term employee does not include a self-employed individual or a 2-percent shareholder of an S corporation, as defined in paragraph (g)(2)(ii) of this subsection. For example, a sole proprietor, a partner in a partnership, or a director solely serving on a corporation's board of directors (and not otherwise providing services to the corporation as an employee) is not an employee for purposes of section 125, and thus is not permitted to participate in a cafeteria plan. However, a sole proprietor may sponsor a cafeteria plan covering the sole proprietor's employees (but not the sole proprietor). Similarly, a partnership or S corporation may sponsor a cafeteria plan covering employees (but not a partner or 2-percent shareholder of an S corporation). (ii) Two percent shareholder of an S corporation. A 2-percent shareholder of an S corporation has the meaning set forth in section 1372(b). ... (iv) Examples. The following examples illustrate the rules in paragraphs (g)(2)(ii) and (g)(2)(iii) of this section: Example (1). Two-percent shareholders of an S corporation. (i) Employer K, an S corporation, maintains a cafeteria plan for its employees (other than 2-percent shareholders of an S corporation). Employer K's taxable year and the plan year are the calendar year. On January 1, 2009, individual Z owns 5 percent of the outstanding stock in Employer K. Y, who owns no stock in Employer K, is married to Z. Y and Z are employees of Employer K. Z is a 2-percent shareholder in Employer K (as defined in section 1372(b)). Y is also a 2-percent shareholder in Employer K by operation of the attribution rules in section 318(a)(1)(A)(i). Treas. Reg. §54.4980H-1(a): (15) Employee. The term employee means an individual who is an employee under the common-law standard. See § 31.3401(c)-1(b). For purposes of this paragraph (a)(15), a leased employee (as defined in section 414(n)(2)), a sole proprietor, a partner in a partnership, a 2-percent S corporation shareholder, or a worker described in section 3508 is not an employee.

@Peter Gulia the plan is required to accept payment from any third-party. Most commonly that would be the employer providing a COBRA subsidy. But it could also be the employee on behalf of a former spouse. As Chaz noted, sometimes a divorce decree will require this. That's not the employer's problem (any such state family court order is preempted by ERISA and not enforceable against the plan), but it could be the employee's problem if they failed to do so. Bottom line is payment does not have to come from the QB. The plan has to accept payment from any source. Here's a couple cites confirming: https://www.govinfo.gov/content/pkg/FR-1999-02-03/pdf/99-1520.pdf Many plans and employers have asked whether they must accept payment on behalf of a qualified beneficiary from third parties, such as a hospital or a new employer. Nothing in the statute requires the qualified beneficiary to pay the amount required by the plan; the statute merely permits the plan to require that payment be made. In order to make clear that any person may make the required payment on behalf of a qualified beneficiary, the final regulations modify the rule in the 1987 proposed regulations to refer to the payment requirement without identifying the person who makes the payment. https://www.irs.gov/pub/irs-drop/n-05-50.pdf Under the COBRA continuation coverage requirements of section 4980B of the Code, payment is merely required to be made; there is no requirement that it be made by the qualified beneficiary. If full payment by a third party (such as the HCTC advance payment program) is tendered timely to a plan for the COBRA coverage of a qualified beneficiary and the plan terminates the coverage of the qualified beneficiary for failure to make timely payment, the plan is not in compliance with the COBRA continuation coverage requirements and is subject to the excise tax of section 4980B (generally, $100 per day per beneficiary for each day that the plan is not in compliance with respect to that beneficiary).

Interesting question. My position would be that the plan terms (including the carrier/stop-loss restrictions) still govern to require that the former spouse be removed from active coverage based on the divorce order. Plans (and carriers/stop-loss) almost universally do not extend eligibility to a former spouse. (Exception would be the Massachusetts law that allows former spouses to remain in active fully insured coverage in some situations.) I guess in theory the appeal could undo the divorce and effectively reinstate the marriage (although I've never heard of this happening), which would cause the spouse to again gain eligibility. If that happened, you would probably have to treat it as a mid-year HIPAA special enrollment event in the same manner as a marriage. But that seems very unlikely. It's almost certainly just the terms of the divorce that could be modified on a successful appeal. In short, my approach would be to consider the divorce final, remove the former spouse from active coverage, and offer COBRA rights. Any change to the divorce status from the appeal (unlikely) could be addressed at that point.

Yeah the DOL guidance is a bit nuanced in this area. Especially Advisory Opinion 94-31A: https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/advisory-opinions/1994-31a Here's some more thoughts on that point: https://www.newfront.com/blog/j-and-j-case-practical-considerations-the-erisa-trust-rules-for-health-plans-part-2 On the other hand, using a separate account that is not in the plan’s name (e.g., in the employer plan sponsor’s name) would not necessarily cause the funds to be treated as plan assets. DOL guidance provides that “the mere segregation of employer funds to facilitate administration of the plan would not in itself demonstrate an intent to create a beneficial interest in those assets on behalf of the plan.” Accordingly, the employer could carefully create a separate account in its name whereby there is an “absence of any other actions or representations which would manifest an intent to contribute assets to a welfare plan,” and thereby avoid creation of plan assets in maintaining that separate account. Key Point: The DOL states if employers are careful not to cause the plan to gain a beneficial interest in a separate account, “the mere establishment of an account in the name of the employer to be used exclusively in administering the plan would not create a beneficial interest in the plan.” (emphasis added) Ultimately, this is a facts and circumstances analysis. As the DOL summarizes, “whether a plan acquires a beneficial interest in definable assets depends, largely, on whether the plan sponsor expresses an intent to grant such a beneficial interest or has acted or made representations sufficient to lead participants and beneficiaries of the plan to reasonably believe that such funds separately secure the promised benefits or are otherwise plan assets.”

A few comments/responses: I assume they are taking advantage of the DOL Technical Release 92-01 trust nonenforcement policy (i.e., the "cafeteria plan exception"). In other words, there is no trust. In an unfunded self-insured health plan, there is no obligation to share any surplus with participants. This is just a standard risk-shifting structure with claims paid from general assets. Level funded plans essentially pre-pay for claims during the course of the year. If those funds are not actually drawn down based on more favorable experience, there is no obligation to return them to participants. No different than if the pre-payment structure had not been in place, and claims were simply paid as they came in. The employer simply retains the amount in general assets. This is of course different than the situation with MLR rebates for fully insured plans. In that case, the portion of the rebate attributable to employee contributions is plan assets that must be returned to employees or used for another DOL-approved plan purpose. This is also different from a situation that might arise under some fully insured "participating" policies that were most common in the past and pay a "dividend" or "experience-rated refund". Those situations are more akin to the insurer rebate/refund/demutualization/shared savings/excess surplus guidance from the early 2000s and generally have to be handled in the same manner as an MLR rebate. More details: https://www.newfront.com/blog/j-and-j-case-practical-considerations-the-erisa-trust-rules-for-health-plans-part-1 https://www.newfront.com/blog/mlr-rebates-2 Slide summary: 2025 Newfront ERISA for Employers Guide

Agreed, but the account also reimburses health expenses. You can't avoid GHP laws simply by tacking on non-medical expenses to the arrangement. Neither is an HRA (in most situations), and that is still subject to Section 111 reporting. I hear you it may not make a whole lot of sense--but I'm not seeing any carve out here.

Tough one. I'd say it is a group health plan under the MSP rules generally because it reimburses medical expenses. The Section 111 rules have specific HRA rules, which I'd be inclined to agree do not apply to this arrangement. Although the way the Section 111 rules define HRA seems pretty broad, the fact that non-medical expenses are included make this hard to shoehorn into any HRA definition (something about feathers being too wet). I'm not sure that leaves you in a better place, though. The HRA rules at least restrict the Section 111 reporting to those that make $5k+ available annually. Seems to me this arrangement gets roped into reporting regardless of the amount made available because it isn't eligible for that HRA conditional relief. In other words, to the extent it can reimburse medical expenses, it's probably just a plain vanilla GHP in the eyes of the Section 111 rules. 42 CFR §411.101: https://www.govinfo.gov/content/pkg/CFR-2010-title42-vol2/pdf/CFR-2010-title42-vol2-sec411-101.pdf Group health plan (GHP) means any arrangement made by one or more employers or employee organizations to provide health care directly or through other methods such as insurance or reimbursement, to current or former employees, the employer, others associated or formerly associated with the employer in a business relationship, or their families, that— (1) Is of, or contributed to by, one or more employers or employee organizations. (2) If it involves more than one employer or employee organization, provides for common administration. (3) Provides substantially the same benefits or the same benefit options to all those enrolled under the arrangement. The term includes self-insured plans, plans of governmental entities (Federal, State and local), and employee organization plans; that is, union plans, employee health and welfare funds or other employee organization plans. The term also includes employee-pay-all plans, which are plans under the auspices of one or more employers or employee organizations but which receive no financial contributions from them. The term does not include a plan that is unavailable to employees; for example, a plan only for self-employed persons. https://www.cms.gov/files/document/mmsea-section-111-ghp-user-guide-version-75-july-2025.pdf A Health Reimbursement Arrangement (HRA) is a GHP arrangement and is subject to the MSP reporting provisions. HRAs include Individual Coverage HRAs (ICHRAs). ICHRAs can be used to pay both premiums and medical claims. All HRAs, including ICHRAs, Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs), and excepted benefit HRAs, are subject to the applicable MSP provisions regardless of whether or not they have an end-of-year carry-over or roll-over feature. An HRA is funded 100% by an employer.

Yes. Excepted benefit status is relevant for HIPAA portability/ACA market reforms. It's not relevant for the ERISA rules, which require an SMM within 60 days of adoption of a material reduction in group health plan benefits. A material reduction in dental/vision (regardless of excepted benefit status) qualifies for this purpose as a group health plan. More details: https://www.newfront.com/blog/when-to-distribute-an-updated-wrap-spd https://www.newfront.com/blog/aca-and-hipaa-excepted-benefits Cite: https://www.govinfo.gov/app/details/CFR-2022-title29-vol9/CFR-2022-title29-vol9-sec2520-104b-3 (d) Special rule for group health plans. (1) General. Except as provided in paragraph (d)(2) of this section, the administrator of a group health plan, as defined in section 733(a)(1) of the Act, shall furnish to each participant covered under the plan a summary, written in a manner calculated to be understood by the average plan participant, of any modification to the plan or change in the information required to be included in the summary plan description, within the meaning of paragraph (a) of this section, that is a material reduction in covered services or benefits not later than 60 days after the date of adoption of the modification or change. Slide summary: Newfront Office Hours Webinar: ERISA for Employers

(1) Is advanced behavioral analysis considered a preventive type of therapy or procedure which is required to reimbursement in full under the ACA? [Would have to do more research, but behavioral, social, emotional screening is included as one of the ACA child preventive services. See here: https://downloads.aap.org/AAP/PDF/periodicity_schedule.pdf] (2) Is this therapy considered a mental health procedure subject to protection under the mental health parity requirements? [Would have to do more research here too, but this seems likely to be an impermissible NQTL. See Q/A-1 here: https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-39-final.pdf] (3) Is there any other reason that prohibits or precludes the client from adopting a minimum age requirement as a condition to being eligible for reimbursement for advanced behavioral analysis, whether or not required under the ACA? [It also seems risky under the ACA Age 26 mandate's uniformity requirement. You could argue it applies to all individuals regardless of whether they are children, but how employees/spouses won't be under age 16 so that is a difficult argument. See subparagraph (d): https://www.govinfo.gov/content/pkg/CFR-2024-title29-vol9/pdf/CFR-2024-title29-vol9-sec2590-715-2714.pdf]

Welcome to the wonderful world of COBRA/Medicare interaction. As a general rule, the key for anyone age 65+ losing active coverage is to enroll in Medicare asap for a whole host of reasons. Sounds like you've checked that box, kudos. Most of the time it is not economically rational to enroll in both Medicare and COBRA--typically it makes much more sense to instead use those funds to pay for Medigap coverage. But I take your point here that you want to continue to have access to specific providers here that are not available through Medicare. That could make sense. You definitely are going to be offered COBRA because you have a loss of coverage caused by termination of employment. That is a COBRA qualifying event regardless of your age and/or Medicare eligibility. Just keep in mind that you can lose your COBRA rights if you enroll in Medicare after your COBRA election. That doesn't appear to be the case here for you, so that's just a heads up. As to your specific questions--they are very plan/carrier specific so probably nobody here will be able to address them directly. On the more generic front, once you lose active coverage and have COBRA paired with Medicare, the coordination of benefits rules generally flip. That means Medicare will pay primary, COBRA will pay secondary. If the claim is submitted to Aetna in the standard manner by the provider, there should not be any action item for you here. They will coordinate with Medicare to determine responsibility--which in theory would be solely through Aetna's cost-sharing structure if the provider does not accept Medicare. There are some cases where you may have to submit a provider bill to the carrier to process a claim that is not handled through the standard channels, but I doubt that would come up often. I also doubt you would have to submit something from Medicare showing that the provider attempted to bill them and they denied it. This stuff will probably all be back-end administrative processes that you are not directly involved in. There's much more info here that may be helpful: 2025 Newfront Medicare for Employers Guide https://www.newfront.com/blog/the-medicare-form-cms-l564-for-employers https://www.newfront.com/blog/how-cobra-and-medicare-interact-for-retirees

What you're describing sounds like an LSA, which is a non-medical arrangement. By definition, an LSA cannot include §213(d) medical expenses--otherwise it would become a group health plan. The ACA does not apply to an arrangement like that. It would apply to group health plans like an HRA. More details: https://www.newfront.com/blog/lifestyle-spending-account-compliance-considerations Even if we were talking about an HRA, there is nothing in the ACA Age 26 mandate that requires direct reimbursement to the adult child. When an adult child is covered by a major medical plan, the reimbursements go directly to the provider. When an employee submits a child's medical expense through a health FSA, the reimbursement goes directly to the employee. Same deal with HRAs. More details: https://www.newfront.com/blog/aca-age-26-mandate-2 So really the response is nonsensical on many levels.

There's no clear way to handle, but yes they should do something in that situation where it is clear employer error. I'm skeptical that occurred here, though. These are usually employee election mistakes. Here's some discussion if it was a clear employer error-- https://www.newfront.com/blog/correcting-missed-hsa-contributions Missed Employer HSA Contribution: Prior Year (Correction After 4/15) In some cases, employers will not discover the missed employer contribution until after the tax filing deadline (generally April 15) has already passed. This unfortunately means that the employer can no longer make the missed contribution attributable to the prior year (i.e., the year in which the employer missed the contribution). Employers will generally attempt to correct the missed contribution in this situation by simply making the HSA contribution attributable to the current year (i.e., the year of the corrective contribution). However, there are a couple of potential pitfalls to be aware of with this approach: If the employee is no longer HSA-eligible in the current year (e.g., the employee is no longer enrolled in the HDHP), the employer cannot make an HSA contribution for the current year. If the employee remains HSA-eligible in the current year, the extra contribution could cause the employee to either exceed the proportional contribution limit (e.g., if the employee loses HSA eligibility mid-year), or the statutory maximum contribution limit (e.g., if the employee had already set elections to reach the maximum amount for the current year and does not adjust them accordingly). Nonetheless, making the HSA contribution attributable to the current year is still typically the best option under the circumstances to address the missed contribution if the employee is still HSA-eligible and confirms an understanding of the applicable limits. If the employee had previously made an HSA contribution election designed to meet the statutory maximum, the employee will need to reduce that election going forward by the amount of the employer’s corrective contribution. Otherwise, the other reasonable alternative would be to provide standard taxable income in the amount of the missed contribution. If still HSA-eligible, the affected employee could choose to use that additional compensation to elect a higher pre-tax HSA contribution election in the current year, which would ultimately create essentially the equivalent result as the current year employer HSA contribution correction approach. Potential Complications: Employees who are no longer HSA-eligible in the current year (e.g., they are no longer enrolled in the HDHP) cannot receive a current year HSA contribution. In this case, employers should consider making the missed payment to the employee as standard taxable cash compensation. If the employee has terminated from employment, the HSA account with the employer’s designated custodian may no longer be open. Furthermore, it may be difficult for the employer to ascertain the former employee’s HSA-eligibility status in the current year. Accordingly, in this case employers should consider making the missed payment to the former employee as standard taxable cash compensation. Employees may argue that they should receive some form of lost earnings compensation for the duration of the failure. Although there are no specific rules addressing this (unlike, for example, the EPCRS lost earnings rules that apply in the 401(k) context), employers might consider accommodating such a request. If the additional amount is included in the HSA contribution, that will count toward the current year annual contribution limit, potentially requiring the employee to further reduce their HSA contribution election. If the employer reported the amount withheld as an HSA contribution on the prior year Form W-2 (Box 12, Code W), the employer would generally need to issue a corrected Form W-2c reflecting the actual amount of HSA contributions for the prior year.

There's no way to address the issue for prior years at this point. HSA contributions for a prior year cannot be made after 4/15. There's also no way to transfer an FSA to an HSA. So unfortunately it's a cautionary tale to keep on top of your paystub and benefits. Best you could hope for would be for the employer to provide an employer contribution to the HSA for 2025 as a corrective measure. However, the employer should not even consider that unless they truly made an error implementing your election (i.e., you actually elected HSA).

Unfortunately, at least some of the money is gone. The health FSA rules require forfeiture of unused amounts at the end of the end of the plan year (plus any associated grace period/run-out period). The only saving grace may be the carryover. If your plan has a carryover feature (many plans do, but not all), you should have carried over the max. That carryover limit was $640 from '24 to '25. Any excess would have been forfeited. More details: https://www.newfront.com/blog/fsa-experience-gains-from-forfeitures There's nothing prohibiting having a health FSA while covered by an HDHP. It simply blocks your HSA eligibility. So it's not necessarily an employer error. You would have to look at what you elected. If you actually elected the HSA (seems unlikely, but possible), that would be quite a situation because it would be too late to make HSA contributions for prior years. Slide summary: 2025 Newfront Section 125 Cafeteria Plans Guide