Cafeteria Plan POP Plan Doc Amend.

[Guest llerner]

According to our document provider, each time a client adds a new benefit such as life, prescription, dental, vision, ltd or voluntary benefits - an amendment in plan document language for cafeteria plan must take place. The charge is $250 in addition to annual administration. I am arguing that the term "group insurance" or "group health insurance" should be used to cover all these since the IRS already states that group health means medical, dental, vision or other employer provided insurance. The document must be modified even if the employer offers LTD as an employer paid benefit and then another if they offer voluntary buy-up the following year etc. If an employer offers life either employer paid or employee paid, it must be amended as well.

The only reason the TPA knows this is because apparently a well known voluntary benefit carrier is telling clients that when they add voluntary benefits, they need an add on document which this carrier will provide for free. Then they will also replace current TPA but do not explain that if the membership falls in the voluntary program, this free service will be withdrawn. The document provider does not provide for simple language like group insurance or group health. Why would the plan document have to include employer paid benefits as well? This is a well know firm that advertises here as well that provides Plan documents. What will result is that the TPA will lose entire cafeteria to AFLAC or if group insurance is handled, each time a client adds or modifies a benefit, they will have to be alerted that it will cost them to modify Plan Document. This goes against all logic seems ridiculous in light of IRS language in recent times and general market conditions. Does anyone have any thoughts or experience with this? It seems excessive to me. I can understand why restatement is necessary for HIPAA and COBRA for FSAs but amending a plan document and spds each time an employer modifies or changes does not ring true. Is this just a marketing ploy to push unnecessary plan language changes by the document vendor, TPA and the voluntary benefits company is piggybacking on this to their advantage to capture sales?

[QDROphile]

A cafeteria plan can be designed along the lines you suggest, with flexibility to add and delete insurance arrangements that can be paid through the pre-tax premium feature of the plan. Whether or not you call it a formal amendment, the plan should document the component insurance plan, for example, on a schedule. A change to the schedule should not cost $250. But you also have to implement and coordinate changes appropriately, and notify participants.

We have gone through the AFLAC attack several times. Outcomes differ by client, but we usually just add the AFLAC insurance to the exisiting plan. The sales person says that won't work, but the home office knows better.

[Guest llerner]

I appreciate your suggestion of a schedule A -or attachment which makes sense! Don't you think if they have employer paid plans they have nothing to do with cafeteria plan document since this is a POP only and therefore no pre-taxing involved. Please comment. Thanks again!

[QDROphile]

Either way. A cafeteria plan document can be used as a vehicle to have a single umbrella that covers all of the employer's plans, whether or not all of the component plans require or allow for employees to pay for all or part of the cost of the benefit. A cafeteria plan document can also be used strictly for the purpose of compliance with section 125, and the plans of the employer that do not involve payment of premiums by employees would have nothing to do with the cafeteria plan.

[Guest llerner]

That makes sense. My understanding is that when voluntary benefits companies say they will do an add-on cafeteria plan or another document as a supplement to the current plan- that this is illegal since there is only one cafeteria plan document. The strategy is to replace the current one eventually and insurance carriers do not care about the details regulating 401(k) or cafeteria plans, it's the employer's problem to know these things since they just sell products.

For smaller groups that don't need to submit schedule 5500, this is not an issue. For larger groups, they could find themselves in deep trouble reporting two plans.

[QDROphile]

The intent of the purveyors may be nefarious, and bad coordination can lead to trouble, but please explain the illegality. One may have more than one document (an identifiable collection of related pages of paper) and yet have a single plan (an identifiable collection of documents). Even if you don't allow the definition trick, what is the proscription on multiple cafeteria plans?