POP election and documentation requirements?

[MD-Benefits Guy]

I am trying to better understand the legal requirements pertaining to a POP and I am having some difficulty.

1. I have heard that in order to meet the legal requirements, employees must have a choice in actively electing a salary conversion/deduction to cover their premiums...however, most companies that I have encountered or spoken with, do not have a seperate form/document for employees to make such an election. Some have told me that by default, electing any qualified company benefit with an employee premium satifies the "choice" requirement. I think this might work, but if so, then shouldnt there be some language in the plan documents that specifiy...."by electing to participate in the Company Medical Plan I uderstand that I am electing to have a portion of my salary used for the payment of medical premiums" or something to that effect? Can anyone share such language that appears in your plan docs? Or how are other companies handling the requirement for employees to choose cash or premium payments?

2. Plan Document....I believe that one is required, but are most people doing this as a stand alone document or combining it with the Flex Spending Doc? Would it be appropriate to put the POP document into a wrap document? I dont believe a POP requires a 5500 filing?

3. Testing....If the POP is available to all, how could it fail testing? What testing needs to be done and how are other people handling the testing?

Thanks in advance.

[SLuskin]

I am trying to better understand the legal requirements pertaining to a POP and I am having some difficulty.

1. I have heard that in order to meet the legal requirements, employees must have a choice in actively electing a salary conversion/deduction to cover their premiums...however, most companies that I have encountered or spoken with, do not have a seperate form/document for employees to make such an election. Some have told me that by default, electing any qualified company benefit with an employee premium satifies the "choice" requirement. I think this might work, but if so, then shouldnt there be some language in the plan documents that specifiy...."by electing to participate in the Company Medical Plan I uderstand that I am electing to have a portion of my salary used for the payment of medical premiums" or something to that effect? Can anyone share such language that appears in your plan docs? Or how are other companies handling the requirement for employees to choose cash or premium payments? We offer 2 kinds of POP documents - the positive election or the automatic enrollment. If you do the positive election, you must provide election forms. If you do the automatic enrollment, the participants must get a notice that a waiver form is available for them to waiver out. The SPDs must have similar language.

2. Plan Document....I believe that one is required, but are most people doing this as a stand alone document or combining it with the Flex Spending Doc? Would it be appropriate to put the POP document into a wrap document? I dont believe a POP requires a 5500 filing? If there also is an FSA, it makes sense to have them in the same document. If no FSA, the POP should have its own document. I agree that it does not belong in a wrap document.

3. Testing....If the POP is available to all, how could it fail testing? What testing needs to be done and how are other people handling the testing? Under the new Safe Harbor Rules, if everyone is equally eligible for the identical choice of benefits, the plan passes.

Thanks in advance.