Employee Health premium

[Guest bhoskinson]

We are enrolled in a 125 plan that includes a premium conversion plan (POP) and FSA with a plan year of 1.1.0x - 12.31.0x. We are a county that has a self-funded insurance fund for all health, life and 125 contributions. Our plan administrators are considering raising the employee contribution (which is currently offered with the 125 plan on a pre-tax basis.) sometime within the next year, possibly before the new plan year and possibly after the new plan year begins to assist with the funding issues we are facing.

Would the difference of premium still qualify for the pre-tax deductions or would the difference be an after-tax deduction? Do the employees who have an increase in their contribution rate need to submit a salary redirection form authorizing the increase?

[GBurns]

The difference or the new employee contribution amount (depending on how you look at it) is still pre-tax under the section 125 plan.

A new salary reduction depends on the wording of the existing SRA. Some SRAs have a fixed amount and some allow an increase or decrease without a new agreement. Check to see what your existing SRA says.

[Guest bhoskinson]

Thanks!

[Guest Sam Trager]

Just out of curiosity, why is your plan administrator setting the amount your employees contribute? Shouldn't that be an internal decision made by you as the employer?

[Guest bhoskinson]

As a local government entity (County) our Commissioners are the Plan Administrator. They just can't determine when to raise the employee premium because of budgeting issues and a possible salary freeze.

I am however having difficulty finding information to help us establish a "better" SRA which would account for an increase in health premiums without having our 800+ employees resign the form. Is anyone aware of a website that would give guidelines in preparing the form?

[SLuskin]

Here's the statement that we use - "I understand that if my required contributions for the elected benefits are increased or decreased while this agreement remains in effect, my compensation reduction will automatically be adjusted to reflect that increase or decrease."

Caution - both our plan document and the SPD have the appropriate corollary language.