Participation Standards

[Guest ahk1313]

Health Plans:

We have a health plan that is qualified under section 401(a). The eligibility requirements state that you have to be a salaried employee to qualify. Do the minimum participation standards apply to the health plan? If so, when an hourly employee works over 1,000 hours in an employment year are they entitled to benefits even if they do not change status to salaried? Is there case law to substantiate this claim? Does the IRS view this circumstance as a denial of benefits? If so what do we do with employees that work more than 1,000 hours in an employment year and do not change status? Are we liable for denying benefits? Case law?

[Steve72]

There is no such thing as a health plan qualified under section 401(a). Do you mean a 401(h) account for retiree medical benefits?

In any case, there are no minimum participation requirements applicable to health plans. If the classification you have created does not violate any nondiscrimination requirements (e.g., 105 rules applicable to self funded employer provided benefits), there should be no problem.

[Guest ahk1313]

The plan is not qualified under section 401(h). What is a helath plan called that allows for before tax contribitions? Does it fall into a section of the code or is it governed entirley by ERISA?

If the minimum particpation standard is not applicable to health plans is there a corollary between granting employees vesting credit for hourly service and satisfying a waiting period for the health plan ie if there is a 90 day waiting period do some companies forgo this because the employee has worked 1,000 hours?

[Steve72]

You've got to back up a bit. Analogizing health plans to pension plans is going to get you into much more trouble than it will help.

In order to contribute pre-tax dollars to a health plan, you must have a SEPARATE cafeteria plan which satisfies section 125 of the Code. The health plan itself is governed by 105 of the Code and ERISA.

[GBurns]

Being governed by an IRC code section and being covered under ERISA are separate items that have no relationship to each other.

You might want to step back and reconsider your questions etc.