Premium Conversion Plan Documents

[Guest OliverF]

Our employer allows employees to make their owed amount of insurance premiums to be taken out before tax. They also offer a FSA.

Does our employer need a separate premium conversion plan document for our pre-tax health plans that fall under section 125? Also, do these premium conversion plan documents expire every year, as in, the 12 months defined by section 125.

I guess my basic questions are: As the employer, is this something we have to keep on hand? Is this something we have to do every year? If so, what does an actual document look like and how do we go about filling out one? I've been trying to research this topic but am having trouble finding meaningful answers.

[oriecat]

You can have one plan document that covers the premiums and the FSA, as they are both Section 125 benefits. It does not need to be redone every 12 months, only when changes are required.

Who administers your FSA? Generally I would think that your TPA would have provided the plan document for you.

[Guest OliverF]

Thanks for the quick reply. Our FSA plan documents are okay but I thought I need another to cover the fact that our employee's have their insurance premium payments taken out before tax. Is this the case?

[Bill Presson]

Thanks for the quick reply. Our FSA plan documents are okay but I thought I need another to cover the fact that our employee's have their insurance premium payments taken out before tax. Is this the case?

You DO need something saying that. But it can be part of the same document.

[J Simmons]

I agree you do need a 125 plan document that provides for the premium payments. Section 125 says so. It can be added to your FSA document, or you could have a separate 125 document just for the premium payments. These documents do not need to be redone every year, but they do need to be kept up to date for changes in the applicable statutes, regulations and rulings. Of course, when changes are made, you need amendments.

What you do need for each new plan year is an open enrollment period before the new plan year begins. For the premium payment portion, your plan document can provide that an existing election will be continued from one plan year into the next in the absence of a new election during the open enrollment period for the new plan year. However, for FSAs, an employee must make a new election before each new plan year begins if he or she wants to have an FSA for the new plan year--this is so regardless of whether he had an FSA of that type during the ending plan year, or what the amount of it may have been.

[Guest OliverF]

Thanks J and everyone else.