Line 9: Is Stop-Loss Insurance?

[sloble@crowleyfleck.com]

In years past TPA has been filing schedule A for a self-insured medical plan for which the employer has a stop-loss policy. This year, the schedule A reports 17,000 in commissions to the TPA (which I assume are not paid from the plan) and 170,000 in premiums.

I didn't think a Schedule A was needed for a self-insured plan because the insurance contract is whith the employer, not the plan.

Agree/disagree?

[Guest b2kates]

We have always taken the position that stop loss is not insurance to be reported on Sched A.

It is the ownership issue that takes it out of the plan. Generally the policy is issued to the employer and the payments are reimbursements to the employer.

On rare situations, we have seen stop loss in a VEBA which would then require Schedule A disclosure.

[sloble@crowleyfleck.com]

Thanks. Does your answer change if I tell you that employees are paying for the stop-loss insurance premiums (through the cafeteria plan)? Apparently premiums for the stop loss and the self-insurance (and the flex accounts) are contributed to an administrative "medical" recordkeeping account owned by the employer and then the funds are parsed out into various checking accounts to pay stop-loss premiums and claims under the health plan and flex plan.

THANKS!!

[E as in ERISA]

If employees are really paying for the stop loss, then it is possible that you have more than reporting problems. There was lots of discussion about stop loss reported on 5500s several years ago. I think that the DOL was raising some concerns when it saw it reported. I believe that the primary issue was "exclusive benefit." (Plan assets have to be used for the "exclusive benefit" of employees. If the stop loss caps the employer's liability and provides no additional benefit to employees, then plan assets are being misused...) Then I believe that the DOL said that as long as the employer contributions to the plan exceeded the stop loss, then it was generally okay. And that it was not a problem if it was reported on the Form 5500 for tracing reasons (because it was running through the same accounts). The DOL wouldn't treating it as misuse of plan assets. Then I think maybe there were some clarifications based on how the stop loss was structured, who it benefited or who paid for it but I don't recall any of the details.

[sloble@crowleyfleck.com]

So would you agree that if employer contributions cover the stop loss premiums then the stop loss is not a plan asset and need not be reported on Schedule A? I think that is where we are standing now.