Administration of Existing Medical Reimbursement Plan Trust

[Guest Mary Anna T. McCoy, CEBS]

Please advise sources for administration of a client's Medical Reimbursement Plan Trust. I have a 401(k) client who has had for years an Executive Corporate Medical Reimbursement Plan Trust administered by Lincoln Financial Group. They have received notice that Lincoln will discontinue this product as of 1/1/2002. I have not worked with Executive Medical Reimbursement administration for years and have no sources to recommend. Please advise if you have information on who is still doing this work that I may refer them to.

[GBurns]

Is it the insurance policy that is being terminated or is it that Lincoln FInancial Group will no lomger provide admin services?

If it is the admin services that is being terminated then the insurer should be providing a replacement administrator. In any case I do not see why another TPA would not consider this lucrative account provided there will still be the insurance policy.

If it is the policy that is being terminated, then you should consider a different insurer.

[Guest Mary Anna T. McCoy, CEBS]

Thanks Mr. Burns, There is no insurance involved at all. It is a Corporate Executive Medical Reimbursement Trust that Lincoln established, worked with for some time, and will no longer administer as of January 1st. They did not offer an alternative administrator and made no response upon inquiry. The corporation does have a regular 125 plan, I suppose the owners could simplly use it instead. I think it would be more restrictive than the corporate trust. Any suggestions appreciated.

Tee McCoy

[GBurns]

I have never seen one of these that was not fully insured usually by Guarantee Trust or EPIC. The reason for fully insured is because Treas. regs 1.105-11 which governs Medical Reimbursement Plans requires non-insured (self-funded) plans to not discriminate in favor of highly compensated individuals, which executives usually are. This in addition to other availability and participation rules governing 105 plans, in general, are the reasons for the fully insured product so as to be able to discriminate in favor of the executives.

I suspect that Lincoln is discontinuing because of the legality issue and I do suggest that you ask them about these issues. That way you will better know how to proceed and not proceed under the assumption that your plan is legal and all you need is a new administrator.

I am not as well versed on this issue as I used to be and I hope that Joe Priselac or one of the other Board participants who have more expertise in this area will see this thread. If not send Joe an email through the system.

I also suggest posting your question on another Board.

[Guest Mary Anna T. McCoy, CEBS]

Thanks so much for your reply. The client thought they were self funded for this benefit, as all that was added to the corporate reimbursement amounts was termed a "fee" of 1.15%. However, I was able to obtain the original notification from Lincoln and it does reference a group policy number issued to the Trustee of Medical Reimbursement Plan Trust. Apparently they set up the insured trust of which the client corps were participants. If that is correct, and the applicable laws have not changed, what the client needs is another fully insured trust arrangement to participate in. I really appreciate your help.

Tee Mccoy