New Medical Expense Reimbursement Plan - Effective Date Question

[Guest ElKH]

We have a client who is putting in a medical expense reimbursement plan. It is being put in place to reimburse up to $1,000 annually expenses participants incur that aren't covered by their health insurance. It is employer paid.

We are drafting the document today.

Because this is not an FSA or cafeteria type arrangement, can we backdate the effective date to January?

If you know the answer, can you point me to a citation?

Thanks.

[Ron Snyder]

1. Yes

2. No (at least not on deadline day)

[Guest ElKH]

What would you say is the primary reason it's okay to backdate within the plan year? Is it because it is an employer funded reimbursement?

[GBurns]

The IRS and the courts consistently said that you cannot retroactively adopt a plan and you cannot cover expenses incurred before the effective date of the plan.

At this IRS link you can find their Coordinated Issue Paper on the subject and which will give you some guidance:

http://www.irs.gov/businesses/article/0,,id=96445,00.html

[Guest ElKH]

That is just what I was looking for! Thanks!

[GBurns]

Add Revenue Ruling 2002-58 to your reference material.

[Theresa Lynn]

Revenue Ruling 2002-58, 2002-38 IRB 541 is posted at

http://www.irs.gov/pub/irs-irbs/irb02-38.pdf