Flexible Benefit Plans

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These executive summaries were compiled from EMPLOYEE BENEFITS INFOSOURCE database, a source for information on employee benefits and human resources.

Election Changes for FSA Plans.
LeTourneau, Janet; Broker World; v30 no1 pp 70-71, 73 Jan 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Changes may be made to existing flexible spending account (FSA) elections when a change in status, cost or coverage occurs and the election change satisfies the consistency rule. The consistency rule, applying to each participant separately, essentially states that the change in election must correspond with a change in status that affects that plan year's eligibility under the employer's plan. There is an exception in cases where the participant becomes eligible for COBRA under the employer's group health insurance plan.
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Health Savings Accounts: Back to the Future.
Klug, Kathy; Chianese, Lois; Benefits Quarterly; v26 no1 pp 12-23 1st Qtr 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : December 8, 2009 was the sixth anniversary of the health savings account (HSA). In the six years since their creation, adoption of HSAs has been surprisingly robust, beating out medical savings accounts and 401(k) plans. HSAs offer the ability to make pretax contributions, grow assets tax free and receive tax free distributions for qualified medical expenses. Unlike other individual account plans, HSAs are true accounts owned by participants, and unlike a 401(k) account an HSA allows for tax-advantaged withdrawals. While six years is not sufficient time to declare the HSA a success, the performance of HSAs indicates they still have the potential to increase health care cost savings.
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Retirement Planning Portal Gives 401(k) Participants a Crystal Ball.
Koster, Kathleen; Employee Benefit News; v24 no1 p 42 Jan 2010; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : A financial planning portal provides various views of the future for EMC employees. The portal, developed with Fidelity Investments Consulting Services, simulates the financial effects of changing deferral choices, saving more or longer and altering flexible spending accounts (FSAs), health savings accounts (HSAs) and employee stock purchases. For the 2,100 EMC employees who used the modeling tool for a year, FSA, HSA and employee stock purchase plan participation rose substantially or maintained, while participation for nonusers was flat or dropped. The tool shows how well users are on track in retirement planning and provides customized supplementary educational materials geared to specific life events with financial consequences.
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USERRA and the HEART Act.
Hoseman, Linda Lemel; Employee Benefit Plan Review; v64 no6 pp 24-25 Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The provisions of the Uniformed Services Employment and Reemployment Rights Act (USERRA) and the Heroes Earnings Assistance and Relief Tax (HEART) Act of 2008 affect employers with employees serving in the military. The USERRA requires that time in active military service count toward vesting for defined benefit pensions and other benefits. Those in defined contribution pension plans must be allowed to make up missed contributions, and the employer must provide employer contributions as usual. The HEART Act requires retirement plans to extend survivor benefits and permits benefit accrual up to the day before death or disability. Employers must count any wage differential as compensation for federal taxes. Section 125 plans may recognize a change in status event, and they may permit distribution of unused funds in the participant's account. Plans must be amended to reflect these changes, and benefit calculation methods may need to be updated.
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Massachusetts Health Reform: Employer Coverage From Employees' Perspective.
Long, Sharon K.; Stockley, Karen; Health Affairs; v28 no6 pp W1079-W1087 suppl. Nov-Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Since Massachusetts enacted its health insurance initiative in 2006, most employers maintained their health plans and the number ending or reducing benefits is insignificant. A survey of employees found that by 2008, access to health benefits holds at about 90 percent, with the percentage of workers at small organizations holding steady. Most workers perceive their employer's plan, provider choice and overall quality to be very good or excellent, higher than before the reform. Out-of-pocket spending rose, especially for employees at smaller firms, but the wider availability of flexible spending account funds helped access to care remain stable.
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The Evolution of Employee Benefits at the Economical Insurance Group.
Hubbard, Jennifer; Singh, Parbudyal; Compensation and Benefits Review; v41 no6 pp 27-35 Nov-Dec 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Prior to 2002, The Economical Insurance Group (TEIG) offered a fixed benefit plan that gave the same coverage to all employees combined with a defined benefit pension plan. By 2002 TEIG was expanding rapidly and seeking to increase employee involvement in their own benefits. The company began expanding its benefit offerings with a flexible benefit plan. In 2003, TEIG introduced a defined compensation pension plan, to which most employees chose to transfer. TEIG began offering purchaseable vacation days in 2007, and in 2008 they introduced wellness programs. As of 2009, the company is investigating flexible work arrangements for various employee roles.
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Review Your Benefits Menu: Cafeteria Plans Need Attention.
Culbreth, James H., Jr.; Britton, Eric D.; McClay, Susan D.; Employee Benefit Plan Review; v64 no4 pp 8-9 Oct 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : IRS proposed regulations, issued in 2007, became effective January 1, 2009. The proposed regulations affirm the need for formal documents detailing the plan terms in order for employees to realize tax benefits from cafeteria plans. They also clarify the definition of dependent, allow cafeteria plans to pay adoption assistance and COBRA premium benefits, and limit changes in elections to specific change-in-status circumstances. Additionally, the proposed regulations set limits on changing the plan year and clarify the nondiscrimination rules that apply to cafeteria plans.
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Consumer-Directed Health Plan Employee Education.
LeTourneau, Janet; Broker World; v29 no9 pp 66-68, 69 Sep 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Employees can make the best of a consumer driven health plan (CDHP) only if they have the facts and information to make informed decisions. They need the summary of employee benefit plans detailing medical benefits offered, along with cost sharing responsibilities, drug coverage and wellness plan offerings. They must also understand their own or their family's medical histories and expenses. The data should be laid out on a comparison worksheet, also covering premiums, prescriptions with various delivery options, doctor visits, deductibles and other items. The effect of a health savings account or flexible spending account must be factored in. Providing a comparison tool helps employees see the big picture and make the right decisions.
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What to Do With Those Leftover Flex Credits.
Hunter, Scott; Canadian HR Reporter; v22 no14 p 18 Aug 10, 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : At the end of a plan year, an employee may have leftover flexible benefit plan credits. Rather than losing them, all or some credits could go to establish or contribute to a health care spending account or contribute to a registered retirement savings plan. These options involve taxable income for the employee and payroll implications for the employer. Contribution to a deferred profit sharing plan avoids the tax and payroll issues. Cash is uncomplicated but taxable. The unused credits could go toward a lifestyle spending account for the tax-free purchase of items and services supporting the plan member's health and wellness.
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Mergers and Acquisitions.
LeTourneau, Janet; Broker World; v29 no7 pp 80, 82 Jul 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Managing employees' health flexible spending accounts (FSAs) adds complexity to a merger or acquisition. Responsibility for coverage can stay at first with the seller, but within a year workers' employment shifts to the buyer. Their accounts are moved into the buyer's existing plan, salary reductions are made from the buyer's payroll and members seek reimbursement from the seller. Alternatively, plan members move to the buyer's plan at the outset. The buyer and seller must each have an FSA plan with the same plan year. Coverage is continuous and only midyear elections rising from a change in status are permitted.
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Pitfalls Await Employers Adopting Partner Benefits.
Koster, Kathleen; Employee Benefit News; v23 no8 pp 1, 48 Jun 15, 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Some experts warn taxes and legal complications may await plan sponsors who extend benefits to employees' same sex partners. As of mid 2009, 14 states recognized same sex partners, and a growing number of companies, 57 percent of Fortune 500 firms in 2008, offer them benefits. Plan documents and member communications must be consistent and reflect the benefits available and the sponsor's intent. Extending coverage creates a new class of eligibility, which may require separate underwriting considerations. Most important is the correct tax treatment of the partners' benefits, liable to federal taxes due to the Defense of Marriage Act, and exclusion of the partner as a beneficiary for flexible benefits. Beneficiary status for retirement benefits may also be in question but will at least require substantiation of the relationship.
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Distinct Benefits.
Brosseau, Johanne; Benefits Canada; v33 no5 pp 17, 21 May 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Quebec faces greater challenges in benefit cost management than other provinces. Provincial rules cover drug benefits, eligibility and benefits management, and payroll and sales taxes are complex. Drug costs are disproportionately high. Additional rules over private insurance add to the total cost of health benefits. Employers' best strategy to balance rising costs against sustaining their workforce may be to adopt flexible benefit plans, the Healthy Enterprise Standard promoting employee health and plan designs that encourage healthy behavior change, and to control drug costs through a formulary. Employers should also become active contributors in government decision making on health issues.
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Incenting Workers to Opt out of Health Coverage May Carry Unintended Consequences.
Palmieri, Frank; Employee Benefit News; v23 no4 p 48 Apr 1, 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : As another way to cut costs, some employers may turn to encouraging employees to opt out of family medical coverage if a spouse is eligible for coverage through his or her own employer. If the employer pays an incentive, that payment must be treated as wages and affects all payroll considerations. Employers must be aware that it increases the base pay level and overtime calculations. They must ensure that administrators implement the changes. Failure to do so can leave the employer liable for additional benefits and penalties that can accumulate over time.
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Merging Past and Progressive.
Gresham, Lynn; Employee Benefit News; v23 no4 pp 22, 24-26 Apr 1, 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : A combination of traditional dental benefits and updated plan design is gaining popularity, as employers and employees seek broad benefits, high value and flexibility. More employers want to support medical care through integrated dental care. They are also looking for a competitive edge by covering special treatments employees want, such as orthodontia, cosmetic procedures, implants and sealants. Increasingly popular are plans that allow rolling over unused benefits from one year to the next, customizing dental and vision plans, dental flexible spending accounts and generally enhancing choice.
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Why Employers Should Provide Flexible Benefit Plans.
LeTourneau, Janet; Broker World; v29 no4 pp 74-75 Apr 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : With a Section 125 flexible spending account (FSA) plan, employees and employers can save money on health care premiums, health care and dependent care expenses. For every $1,000 of benefits employees deduct from their payroll, an employer saves $76 in FICA taxes, which can add up to thousands of dollars in savings. By contributing pretax to an FSA plan, employees save on any applicable federal, Social Security, state and local taxes. Additionally, IRS Revenue Ruling 61-146 details a number of additional ways employers can pay pretax for individually owned policy premiums.
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Focusing on Account Products in Health Care Reform.
Patricelli, Robert E.; Journal of Compensation and Benefits; v25 no2 pp 16-18 Mar-Apr 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The variety of health care reform proposals have largely ignored growing burden of out-of-pocket costs. Traditional insurance deductibles have risen to rival those for health savings accounts (HSAs). HSAs, flexible spending accounts (FSAs) and health reimbursement accounts each have positive features as well as drawbacks, limiting wide acceptance. Yet an account-based strategy deserves strong consideration in health care reform. It should be simple, portable, available on a pretax basis and carry over funds from year to year. Without the use-it-or-lose-it provision, FSAs could meet the goals.
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Medicare Mandatory Insurer Reporting for Public Sector Health Plans.
Segal Company: Bulletin; 2 pp Jan 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : The Centers for Medicare & Medicaid Services (CMS) have issued guidance on reporting requirements that went into effect January 1, 2009. The requirements mandate that health insurance companies, third party administrators (TPAs) and the administrators or fiduciaries of self administered plans which do not use a TPA must all register with the CMS and report. The guidance notes that health flexible spending arrangements and standalone dental or vision plans are not obliged to report, but health savings accounts will be treated like any other group health plan. CMS guidance also notes that collecting identifying information such as Social Security numbers is appropriate for the purpose of complying with the reporting requirements.
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New Year Resolutions.
LeTourneau, Janet; Broker World; v29 no1 pp 78-79, 81 Jan 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : Even after the open enrollment period ends, employer and employees have options for finetuning benefits and plan designs to save money for the future. Employers can establish or enhance cafeteria plans, add the 2.5 month grace period for using funds for a given year, give employer flex credits and look at high deductible health insurance. They can offer parking, transit and bicycle commuter benefits. Employees can establish health savings accounts with high deductible health care plans any time during the year and get the full year's tax benefit. All year long, employees benefit from continuing education on using benefits and getting the most out of them. A good approach is to concentrate on a topic each month through the year.
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Recent Guidance Impacts Employer Group Health Plans.
Boling, Deborah K.; Employee Benefit Plan Review; v63 no7 pp 19-20 Jan 2009; journal article

Availability : International Foundation of Employee Benefit Plans
Abstract : IRS Notice 2008-82 covers distributing to reservists called to active duty any unused funds in their health flexible spending accounts, permitted by the Heroes Earnings Assistance and Relief Tax (HEART) Act of 2008. The reservist must be called for at least 180 days and must request the taxable distribution before the end of the year or grace period. The employer can choose to make distributions available and set other conditions and, if allowing distributions, must amend plan documents by the end of 2009. The IRS also revised its definition of qualifying child in Internal Revenue Code Section 152, a change which can affect employer health care and hardship loan provisions.
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Benefits Facts 2009.
Bitzer, Frank J.; Ferrigno, Nicholas W., Jr.; Miner, Deborah A.; Wagner, William J.; King, Sonya E.; Stenken, Joseph F.; 830 pp 2009 2009 ed.; book

Availability : International Foundation of Employee Benefit Plans
Abstract : Provices in-depth coverage of ERISA pension and welfare plans, including those plans used by tax-exempt organizations and governmental entities. Tax-sheltered annuities and nonqualified deferred compensation plans generally exempt from ERISA but regulated under the Internal Revenue Code are also covered. Discusses the establishment and administration of multiemployer plans, including fiduciary duties and responsibilities. The final Form 5500 regulations and adopted final revisions to Form 5500 and many IRS regulatory updates are included.
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Flexible Benefits Answer Book
Gillihan, Ashley; 711 pp 2009 6th ed.; book

Availability : International Foundation of Employee Benefit Plans
Abstract : Discusses the design and implementation of flexible benefit plans and the communications and compliance requirements. Although the concentration is on flexible benefit plans operating under Section 125 of the Internal Revenue Code, also included is discussion on benefits not typically offered in a Section 125 plan--health reimbursement arrangements and health savings accounts, adoption assistance, reimbursed employee parking and mass transit expenses. Includes an overview of several laws that will impact flexible benefit plans in 2010, including the Mental Health Parity and Addiction Equity Act of 2008, Michelle’s Law, privacy and security rules in the American Reinvestment and Recovery Act, and the Genetic Information Nondiscrimination Act.
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Fundamentals of Employee Benefit Programs.
527 pp 2009 6th ed.; book

Availability : International Foundation of Employee Benefit Plans
Abstract : Provides an overview of employee benefits in the U.S. and explains Social Security and Medicare. Retirement information covers defined benefit and defined contribution plans, individual retirement accounts, cash balance plans, automatic enrollment provisions of the Pension Protection Act of 2006 and more. Health benefits covered include drug, dental and vision plans; retiree health benefits; and managing health care costs. Other benefits covered include leave, workers' compensation and domestic partner benefits. Public-sector topics addressed include both health and retirement benefits, regulation of public-sector retirement plans, and benefit cost comparisons between state and local and private-sector employers.
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Link To Full Article
Health Insurance Answer Book.
Garner, John C.; 883 pp 2009 8th ed; book

Availability : International Foundation of Employee Benefit Plans
Abstract : Provides an overview of group health insurance and the health insurance marketplace. Details the factors influencing the design of group health plans and explains the applicable federal and state laws. Covers plan design and administration and cost management. In question and answer format.
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National Survey of Employer-Sponsored Health Plans.
52, 44 pp 2009; book

Availability :
Abstract : Total health benefit costs rose 6.3 percent in 2008, the same increase as in the three previous years. The average benefit cost per employee was $8,482. Health benefits are offered to active employees by 65 percent of all employers with10 or more employees, compared to 70 percent in 2001; most of the decline was among employers with fewer than 200 employees. Consumer directed health plans are offered by 20 percent of large employers, up from 14 percent in 2007.
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U.S. Master Employee Benefits Guide.
Kennedy-Luczak, Kathleen; King, Melanie; Panszczyk, Linda; Turan, Tulay; 826 pp 2009; book

Availability : International Foundation of Employee Benefit Plans
Abstract : Basic ERISA rules are explained. Specific benefits such as health plans, flexible spending accounts, employee assistance programs and elder care, and their design, administration and compliance are discussed.
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