Employers risk with term'd EE's and medical payments

[Guest Jeremy_Davis]

Hi! I'm looking for the language that states that when an employee terminates;

1. S/he is eligible for payment of the entire annual election as long as expenses were incurred during the plan year and while employed

2. The employer is not due repayment for any amounts over the contributions into the plan (i.e. annual election= $2000.00, terminates after only contributing $300.00 submits valid claim for $1500.00 - the employee does not have to pay back the employer the $1200.00 that was not contributed into the plan, but still paid out to the employee.)

If anyone can direct me to the IRS language that describes this, I'd be greatful!!! Thanks in advance.

Jeremy Davis

[LRDG]

http://www.irs.gov/pub/irs-utl/lesson4.pdf

See pages: pdf page #9, doc. page #12

also see:

http://www.pbpmagazine.com/articles/UseItorLoseIt.htm

[Guest Jeremy_Davis]

http://www.irs.gov/pub/irs-utl/lesson4.pdf

See pages: pdf page #9, doc. page #12

also see:

http://www.pbpmagazine.com/articles/UseItorLoseIt.htm

Thanks very much for the links. I did find the answer to my question number 1 above, that the employee is due the entire annual election regardless of contributions into the plan, but I also noticed that the headline on the pages states that the document is from 1998, so I'm hoping a ten year old document will be okay to reference. I don't want to use the second reference, as it is basically a letter to congress by an individual, and not actually something issued from the IRS or the government.

So I'm still really looking hard for info regarding my question number 2 above, and maybe something more recent on question number one.

Either way, a big Thank You to LRDG for starting me out there!

[LRDG]

I wouldn't use either of the links to substiantiate(sp?) the uniform coverage rule. Thought you could do your own research based on the content.

I assume you are looking for language that supports or prohibits recovery of claims that exceed contriutions from terminated employees. Neigher IRS code nor treasurary regs are going to answer your question directly, 'the plan may not acelerate the payment schedule based on claims' is the most direct example of risk shifting requirement.

good luck

[papogi]

You won't find #2 explicitly in the regs. See this recent thread for a good recap of the confusion around this issue:

http://benefitslink.com/boards/index.php?showtopic=33977