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WHO BECOMES THE SPONSOR OF AN INDIVIDUAL VOLUNTARY BENEFIT IF THE EMPLOYERS DECIDES NOT TO SPONSOR IT?

Since it is a purchase of individual insurance, a sponsor is not necessary. The employer would only be allowed to collect premiums, after-tax only, and remit them to the Insurer. The employer is not allowed to receive any compensation for these services other than reasonable compensation for administrative services. Essentially they must take a “hands-off” … Continue reading WHO BECOMES THE SPONSOR OF AN INDIVIDUAL VOLUNTARY BENEFIT IF THE EMPLOYERS DECIDES NOT TO SPONSOR IT?

SHOULD WE INCLUDE PRE-TAX INDIVIDUAL WORKSITE (VOLUNTARY) BENEFITS THAT ARE AVAILABLE FOR PURCHASE (E.G. DISABILITY) BY OUR EMPLOYEES, IN OUR SPD?

Individual voluntary insurance can be treated in to distinct manners. One option is to treat them as an employer-sponsored plan; which would thereby be covered under ERISA and would be subject to all the reporting and disclosure requirements. The other option is to treat them as a non-employer sponsored benefit. To determine if a plan … Continue reading SHOULD WE INCLUDE PRE-TAX INDIVIDUAL WORKSITE (VOLUNTARY) BENEFITS THAT ARE AVAILABLE FOR PURCHASE (E.G. DISABILITY) BY OUR EMPLOYEES, IN OUR SPD?

HOW CAN WE TELL IF A BENEFIT SHOULD BE INCLUDED IN THE SPD, FOR EXAMPLE PET INSURANCE OR PRE-PAID LEGAL?

The only benefits that are required to be included in the SPD are health and welfare plans, essentially medical, dental, vision, life, disability and AD&D. Any other benefits including Pet insurance or Pre-paid legal can be excluded.

IF A FULLY INSURED PLAN SIMPLY CHANGED MEDICAL CARRIERS, DOES AN AMENDMENT HAVE TO BE ISSUED? OR IS THAT CONSIDERED A SMM?

Typically employers state this type of change in their open enrollment materials, and then treat that as a Summary of Material Modification. Technically they should also amend the combined Plan Document/SPD to reflect the change in carriers. The amendment could be a simple single state that explains the change in carrier (i.e. MultiState will now … Continue reading IF A FULLY INSURED PLAN SIMPLY CHANGED MEDICAL CARRIERS, DOES AN AMENDMENT HAVE TO BE ISSUED? OR IS THAT CONSIDERED A SMM?

HOW SHOULD I ADD A CARVE-OUT BENEFIT FOR TRANSPLANT SERVICES?

We advise selecting one of the first two options. Option 1: “Transplant benefits are provided under a separate transplant program and will include the services of a transplant coordinator to assist you. Arrangements will be made at a facility approved by the Plan. Covered transplant services include room and board, physician’s fees, and other related … Continue reading HOW SHOULD I ADD A CARVE-OUT BENEFIT FOR TRANSPLANT SERVICES?

ARE EMPLOYEE CONTRIBUTIONS FOR DISABILITY BENEFITS SUPPOSED TO BE MADE ON A PRE-TAX BASIS?

The common practice is that when payment is made on a pre-tax basis for any benefit, that benefit becomes taxable to the employee. Benefits that were purchased with after-tax dollars are not taxable to the employee or beneficiary since the premiums have already been taxed. If the employer-paid benefits are treated as pre-taxed benefits, the … Continue reading ARE EMPLOYEE CONTRIBUTIONS FOR DISABILITY BENEFITS SUPPOSED TO BE MADE ON A PRE-TAX BASIS?

HOW SHOULD WE CREATE AN SPD FOR CLIENTS WHO HAVE MEDICAL AND DENTAL PLANS THAT RUN AT DIFFERENT TIMES? FOR EXAMPLE IF THEIR MEDICAL PLAN CONTRACT RUNS FROM 6/1 TO 5/31, THEIR DENTAL PLAN RUNS 4/1 TO 3/31 AND THEIR VISION PLAN RENEWS EVERY TWO YEARS (5/1 TO 4/30). SHOULD THERE BE A SEPARATE SPD FOR EACH PLAN?

Two options are available for this situation: Option 1 consists of establishing a wrap-around plan with a plan year that correlates with the Company’s fiscal year, such as 1/1 through 12/31 or one of the contract years. Although the insurance contracts can still use different dates, if the plan files a Form 5500 and has … Continue reading HOW SHOULD WE CREATE AN SPD FOR CLIENTS WHO HAVE MEDICAL AND DENTAL PLANS THAT RUN AT DIFFERENT TIMES? FOR EXAMPLE IF THEIR MEDICAL PLAN CONTRACT RUNS FROM 6/1 TO 5/31, THEIR DENTAL PLAN RUNS 4/1 TO 3/31 AND THEIR VISION PLAN RENEWS EVERY TWO YEARS (5/1 TO 4/30). SHOULD THERE BE A SEPARATE SPD FOR EACH PLAN?

IN A SITUATION WHERE THE EMPLOYER PAYS FOR THE BASE BENEFITS OF A LONG TERM CARE PLAN, AND THE EMPLOYEES THEN BUY-UP ADDITIONAL COVERAGE, HOW DO I INCLUDE THAT INTO MY SPD?

Long Term Care is not considered a qualified benefit and therefore should not be included in the plan. It is one of the few benefits not permitted to be covered by a cafeteria plan. Unfortunately, regulations have specifically excluded LTC benefits and therefore they are to be handled outside the plan with use of a … Continue reading IN A SITUATION WHERE THE EMPLOYER PAYS FOR THE BASE BENEFITS OF A LONG TERM CARE PLAN, AND THE EMPLOYEES THEN BUY-UP ADDITIONAL COVERAGE, HOW DO I INCLUDE THAT INTO MY SPD?

WHAT IS “QMCSO” OR “NMSN”?

How is it determined if a benefit(s), like Wellness programs, critical illness plans, hospital indemnity or voluntary insurance plans, are to be included in a Wrap Document? Employers have flexibility in regards to what plans can be included in a wraparound/bundle plan. Usually an employer chooses to include all insured benefits within a single document … Continue reading WHAT IS “QMCSO” OR “NMSN”?

WHAT DISCRIMINATION RULES APPLY TO WELFARE PLANS?

Cafeteria plans and group health plans are not permitted to discriminate in favor of high income employees. Various tests under Section 105 and 125 are used to ensure that plans do not provide favoritism to high income employees in terms of contributions, coverage and eligibility. Some of these tests are easy to perform because they … Continue reading WHAT DISCRIMINATION RULES APPLY TO WELFARE PLANS?

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