Global Executive Physical Programs

[PhilB]

My company currently has an Executive Physical Program in place for U.S. executives and we are evaluating how to make this a global program. This is a taxable benefit. Payments are made directly to the providers and payroll/tax is notified in order to apply taxes on the payment amount. We are trying to determine how we could offer this to our international associates. Is anyone currently administering this type of benefit on an international level, either themselves or through outsourcing? I am also curious whether there are any ERISA regulations with which we would have to be concerned, even though this benefit would also apply to non-U.S. Citizens.

[jpod]

I don't have an answer for you, but I'm curious about something: why isn't this a nontaxable benefit?

If the concern about taxability is based on assumption that the benefit is a discriminatory self-insured benefit, see Treas. Reg. Section 1.105-11(g).

[PhilB]

I'm not sure actually. The administrative procedure has been in place for some time, and I've not been here that long. In reading another thread related to executive physicals, someone made the statement that the cost of the physicals are includible in the income of executives under Code Sec. 105(h)(1). I haven't investigated the taxability issue on this benefit. My current understanding is that this would be considered an ERISA plan, but is not statutorily excluded from tax under IRC.

[mbozek]

I dont know if physicals are a welfare benefit under ERISA, but to avoid any issue of ERISA regulation set up a separate program for foreign employees. ERISA does not regulate plans for foreign employees with no us income. Also Medical diagnostic exams performed off site are not considered taxable income under a self funded benefit program cited in a prior post.

[Guest CMC]

For what it's worth, it seems to me that to the extent an executive physical program is an ERISA welfare plan, such a program likely comes within the exemption for small welfare plans for certain select employees provided for in DOL Reg. 2520.104-24. Under those regulations, such plans are exempted from the reporting and disclosure requirements of Title I of ERISA, except for the requirement to provide plan documents to the Secretary of Labor upon request.