Coverage of Retired Board Member

[J2D2]

This is one of those "I know there's something out there, but can't find it" issues. Can a self-insured medical plan cover a retired member of the board of directors (assume he/she was never an employee)? Seems it should be OK, assuming the plan meets the non-discrimination rules, but I just can't find anything addressing this issue, so far.

Thanks.

[J2D2]

I'd like to bump and twist this one in hopes of getting some traffic. Let's change slightly. Can an employer's self-insured health plan cover non-employee members of its board of directors?

[JanetM]

Have a couple thoughts, but am not an expert in this area. Think it is section 105 that deals with discrimination in self insured plans. That section refers to employees so I don't think it applies to the first situation.

Can you set up non qual plan for these retired directors? You would have to impute the income to them, but you could gross it up. The only downside is your stop loss carrier may not cover this person or group.

[Kirk Maldonado]

J2D2:

Are you assuing that the receipt of the benefits will be taxable or tax-free?

[J2D2]

Kirk,

The goal would be to provide benefits with the same tax effects as provided to employees, eg cost of coverage and benefits excludable from income.

[Guest AVH@MLS]

A few months ago I researched this issue, as we too wanted to add a non-employee board member to our self-insured plan. While passing the non-discrimination test seemed the primary concern, another thing to consider is that ERISA applies to employees only. As I understood it, if we added the board member, we would forego ERISA protection for that board member.

[Kirk Maldonado]

J2D2:

You said that was your goal, what did your research reveal about whether that result was feasible?

[Guest b2kates]

we have always had the concern that providing health insurance to a non-employee in a self insured plan may be considered the unlicensed sale of insurance by the state dept of insurance.

[Kirk Maldonado]

b2kates:

Is there an issue as to whether you have created a MEWA by covering that individual? (I honestly don't know the answer to that question.)

[Guest b2kates]

Quite possibly,

on one particular client that was our conclusion,in concert with outside counsel and since it was in NJ it is not easy to request a no action from the state dept of insurance.