Promotion

[Guest lschaab]

If an employer decides mid-year to pay the entire cost of a certain class of employees health insurance, can they? What if they call the 'reason' for the 100% contribution due to a promotion? To us there is no qualifying event to allow the change from a pre-tax deduction to no deduction at all, midyear. The other question is, could the employer set it up at the beginning of the year to pay 100% of a certain class?

[Guest b2kates]

if the employer is truly going to pay 100% of the cost, why not change the eligibility of the plan to exclude the group that the employer is going to pay for?

That should satisfy the qualifying event rule.

[Guest lschaab]

I wasn't sure that that type of change could occur mid-year and, more importantly, this is a non-profit group who may find out near the end of the year that they have a surplus and would like to arbitrarily give the "surplus" back to certain employees as a reward for their hard work!

[GBurns]

Why would you not consider this an an eligible change based on there being a significant change in cost as per 1.125-4(f)(1)(2)(i)? Provided, of course, that the plan already allows for classifications. If not the plan would first have to be amended to allow this class.

Restating or amending might provide the opportunity to have a new plan with new cost structure. It might be considered to have the remainder of the year as a short plan year.

b2kates,

Maybe I do not understand the use of the term "exclude" as you use it, but to me if you exclude then they would not be covered.