Premium Only Plan - Participant Count

[amcorson]

Plan allows employees to pay their portion of health premiums pre-tax. The company pays 100% of health premiums for 65 out of 115 employees. The remaining 50 ees utilize the POP and pay their portion pre-tax. I have read that the participant count should be 50, and that makes sense, but I cannot find anything definitive.

Also, I assume the 100/120 large plan rule would apply if the 115 count was used?

Any insights would be appreciated, I am from the Pension side and the Welfare rules do not seem as straight forward.

Thanks.

[J Simmons]

Do the documents for the plan that allows employees to pay their portion of health premiums pre-tax also specify that the company shall pay 100% of health premiums for those 65 employees? If so, then the count ought to be 115 and the the 100/120 large plan rule applies.

On the other hand, if you have two distinct plan documents, plan titles and three-digit numbers in the 501 et seq series, then you have an argument that you have two separate welfare benefit plans, one with a count of 65 employees and the other with 50, and the the 100/120 large plan rule should apply to neither.

[jpod]

If structured correctly, you have one welfare plan for 5500 filing purposes - your medical benefits plan. The pop would be merely a Section 125 plan that is not subject to any 5500 reporting (at least for so long as the 6039D filing obligation remains waived), regardless of the number of individuals eligible for or making use of the pop.

[amcorson]

Thanks. There is one plan. I am still confused by the fact that only 50 employees are utilizing the premium conversion feature, and I read somewhere that an employee is not considered a participant until they "contribute" or use the feature.

Let's say an Employer provides 100% of insurance for all employees. This is an employer expense and no plan is needed, correct? If this is correct, why would you count the 65 EEs that the ER pays 100% of premiums and don't uitilize the POP?

If the above is incorrect, I guess I have my answer

[J Simmons]

Thanks. There is one plan. I am still confused by the fact that only 50 employees are utilizing the premium conversion feature, and I read somewhere that an employee is not considered a participant until they "contribute" or use the feature.

Let's say an Employer provides 100% of insurance for all employees. This is an employer expense and no plan is needed, correct?

Incorrect. It is the employer providing health benefits to its employees, albeit via a third-party insurance policy. That's an ERISA employee welfare benefit plan.