Ride those benefits

[SheilaD]

This is a completely new animal to me so I'm not sure where to post my inquiries. (Puns were mainly intentional!) There is an association of jockeys that works (mainly) for a specific casino/race track. The race track pays a set amount to the association for the purpose of providing benefits for the jockeys of that track. The amount is set "per the agreement that governs all race track / casinos". The association (which is non-profit) would set up a plan that credited each eligible jockey (see below) with $ 15,000 annually that they could spend on any or all of the following: medical insurance, disability insurance, life insurance, dental insurance or pension.

Eligible jockeys would ride in at least 200 races (annually) and more then 50% of their total races would have to be at this specific facility / track for the year.

This is all I know and the first proposal of it's kind that I have run across. Can anyone give me any pointers on whether this works, is legal and what sort of testing it may be subject to? Is the pension plan a regular qualified plan and, if so, what do I use as compensation? I'm thinking it must be non-qualified as each jockey is self-employed.

Any information would be appreciated.

Sheila

[GBurns]

I suggest that you contact other tracks to see if this is being done any other track. Then copy whichevr one seems most fitting.

However, before you start that maybe you should revise your wording. For example, If the jockeys are self-employed they cannot work for the track, they can work at the track.

[Blinky the 3-eyed Fish]

This is a non-issue. Everyone knows that jockeys have a pot of gold at the end of the rainbow. $15,000 is chump change.

[david rigby]

As George implies, a good first step would be to clarify "who is the employer?"

They may not really be self-employed.

[GBurns]

The weather has not been allowing enough rainbows, so they have been going after purses.

[leevena]

There are a couple of options available to you, but I am not sure that they may fit perfectly what you are trying to do.

I agree with the suggestion to research other race tracks for possible other models from which to work from.

Depending on your state, an association plan may or may not work. My initial reaction is that since this is a single site group of jockey's, you may not have enough to qualify as an association. Another option would be to find an association, with benefits, that they may be eligible to join. I would work with the local carriers in the area and see if they have any leads. Keep in mind though, that your regular "group rep" may not be fully aware of what other types of plans are available, even from their own company. For example, I am in San Diego, and very few of the street "group reps" know that their carriers cover prevailing wage groups with special plans.

Another option to explore is if the casino health plan could abosrb them. Even though they are not employees of the casino, similar situations exist. For example, often times companies will extend benefits to their BOD or towns that extend coverage to their very part-time council people. You will need to explore this with the casino and their carrier or plan administrator.

[SheilaD]

I'm getting more information each hour... From what I gather, there was a large jockeys association which these jockeys were members of and that association provided similar benefits. That association is going (has gone?) bankrupt so they want to form their own association. Perhaps I should back-up a step. I have never dealt with any benefits for any type of association. Is this what a VEBA is? What rules govern the definition of an association and regulate what benefits it can offer?

Thank you for your thoughts.

Sheila

[leevena]

Rules for the association are set at the state level. The key to an association is usually the definition of who can join and what size they must be.

Don't know if the old plan was a veba, but my guess is no.

As I suggested earlier, try working backwards with your group carrier reps, they may be able to point you in the right direction.

[four01kman]

Knowing nothing about jockeys, other than they ride horses, why would they have to be treated differently than members of any other association that maintains pension, profit sharing, etc. plans. For example, either the PGA or the USGA (I'm not sure which) maintains a pension plan for professional golfers. The benefits are accrued annually, based on a minimum number of tournaments played that year. This sounds awfully similar to what you have been told about the jockeys.

Ride 'em cowboy.

[leevena]

My background is health benefits, not retirement, but I do believe that the PGA Tour retirement plan is a deferred comp plan with some bonuses kicked in for certain goals that the players must meet.

As for the jockey plan, they would like to structure it as a $15,000 yearly contribution to spend on a variety of plans (retirement, medical, life, dental, etc.). The medical is where I see the problem. It will be very difficult to find a carrier willing to cover such a small number of lives in such a "group".

[SheilaD]

We are still researching this project (those pesky calendar year end 5500s keep getting in the way). We've gotten a little further -- have established that the association is indeed a valid association in the state. What I can't seem to get my mind around is how the benefits get to the jockeys without taxation. The association is "compensating" them with the 15,000 (assuming that they meet eligibility). Theoretically each jockey - as a self employed person -- could set up and individual 401(k) and dump the money in it. But if the association used the money on their behalf to pay a medical or life insurance premium I would think that the amount would have to be taxable to the jockey. I don't see how they could have a single pension/k plan that all of the jockeys would have the ability to contribute to or the equivalent of a cafeteria plan where the premiums would be tax free.

One of my colleagues mentioned that some insurance companies give all of their commissioned sales people 1099's but they are eligible to participate in the insurance companies qualified plan? Perhaps there are special rules that deal with this situation but I've not encountered them. Has anyone else?

Thanks for your thoughts during this busy time of year.