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Corporate Resolution Format Health

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Corporate Resolution Format Health Powered By Docstoc
					Health Care Premium
Reimbursement Plan
          What we will discuss
• Section 125 Plans and Administration
  – We will go over the basics of Cafe Plans
• HCPR Specifically for Small Employers
  – Program designed for self administration
• Marketing HCPR
  – Which employer groups are best to work with
• Certification / Authorization
  – Requirements of brokers to sell this plan
Section 125 Cafeteria Plans
    Section 125 Cafeteria Plans
– Premium Only Plans (POP)
– Flexible Spending Accounts
   • Medical
   • Dependant Care
   • HCPR
       Section 125 Cafeteria Plans -
       Plans with or without an FSA
• Plan Documents
  – Corporate Resolution
  – Adoption Agreement
  – Plan Information Summary*
  – Summary Plan Description*
  – Salary Reduction Agreement Form*
    • * These must be given to employee within the proper time limit
      for enrollment or when plan changes occur
            Section 125 Cafeteria Plans -
                     POP Plans
• Premium Only Plans
   – Allows employees to pre-tax deductions for qualified premiums
       •   Health Insurance
       •   Dental Insurance
       •   Vision Plans
       •   Group Term Life Insurance
       •   Disability Insurance
       •   HSA Contributions by employee
   – These premiums are ‘List Billed’ to the employer. The employer will
     pay directly to the insurance company on behalf of each employee
     enrolled.
   – There are no reimbursements to employees for these premiums
     payroll deducted
       Section 125 Cafeteria Plans -
       Flexible Spending Accounts
• Medical FSA
  – Medical Expenses which are not reimbursed
    through insurance or an employer reimbursement
    program
  – Expenses may be for the employee and qualified
    dependents
  – Maximum amount per plan year an employee may
    set aside.
       Section 125 Cafeteria Plans -
       Flexible Spending Accounts
• Medical FSA – Section 213 Qualified Expenses
  – Limited Use FSA (for those that have HSA)
  – General Use FSA (for those that do NOT have HSA)
  – Post Deductible FSA (for those that have HSA)
        Section 125 Cafeteria Plans -
        Flexible Spending Accounts

• Medical FSA
  – Reimbursement may be advanced
    to employee participant
  – Changes are not allowed unless it is
    a “qualified change of status”
  – May be subject to COBRA / HIPAA
  – “Use it or Lose it” Rule
        Section 125 Cafeteria Plans -
        Flexible Spending Accounts
• Dependent Care FSA
  – Services must be for the physical care of a child
    under the age of 13 or a dependent who is
    incapable of self care.
      Section 125 Cafeteria Plans -
       Flexible Spending Accounts
• HCPR FSA (Health Care Premium
  Reimbursements)
  – Program for small businesses designed specifically
    to be easy and compliant
  – Must meet DOL guidelines
     • HIPAA
     • ERISA
Health Care Premium Reimbursement
                Plan
• New Businesses
  – Within first year of business
     • Many insurance carriers require business history of
       more than 12 months for small employers
  – Affordability to help pay for premiums
  – Employees are part time and cannot qualify for
    group coverage
Health Care Premium Reimbursement
                Plan
• Small Employer Groups that do not have a group
  health plan in place
  – Not enough employees
     • Ex: one or two office staff and many independent contractors who
       are not employees
     • Ex: Too many part time employees who are not eligible for group
       coverage
  – Lack of participation due to ‘spouse coverage’
  – Affordability by employer to contribute premium dollars
Health Care Premium Reimbursement
                Plan
• Plan Set Up with Specific Requirements to
  Meet DOL rules for HIPAA and ERISA
  – Limited Employer Involvement
  – Offered in a Non Discriminatory manner
     • Voluntary
     • No Employer contribution to premium
Health Care Premium Reimbursement
                Plan
• The contract must be an individually
  purchased contract and not an employer-
  sponsored insurance plan
• The employee must be the policyholder of the
  insurance policy.
   Health Care Premium Reimbursement
                   Plan
• Tax Savings of    Breakdown of Pay Check
                          and Deductions
                                                Not Participating
                                                    in Cafeteria
                                                                     Participating in
                                                                          Cafeteria
  Premiums to                                           Plan                 Plan

  Employee         Gross Monthly Pay            $2,500.00           $2,500.00

• The Employee     Less Premium for Major                           (348.00)
                      Medical
  Saved $123 per   Taxable Income               2,500.00            2,152.00
  month or
                   Less 28% Federal             (700.00)            (603.00)
  $1476 for a         Withholding
  year             Less 7.65% Social Security   (191.00)            (165.00)
                      Tax
                   Less Premium for Major       (348.00)
                      Medical
                   Spendable Income             $1,261.00           $1,384.00
 Health Care Premium Reimbursement
                 Plan
• Tax Savings to         Breakdown of Pay
                                Check
                                               Not Participating
                                                   in Cafeteria
                                                                   Participating in
                                                                        Cafeteria
  Employer                  and Deductions             Plan                Plan


• 7.65% FICA          Gross Monthly Pay        $2,500.00           $2,500.00

  Match is reduced    Less Premium for Major                       (348.00)
                         Medical
• The employer        Taxable Income           2,500.00            2,152.00

  saved $26 a         Less 28% Federal         (700.00)            (603.00)
  month or $312 a        Withholding

  year for this one   Less 7.65% Social
                         Security Tax
                                               (191.00)            (165.00)

  employee            Less Premium for Major   (348.00)
                         Medical
                      Take Home Pay            $1,261.00           $1,384.00
Health Care Premium Reimbursement
                Plan
• Who Can Participate in the Plan
  – Those who are considered employees under IRS
    Code 106
  – Employer establishes eligibility for pre-tax
    deductions
     • Amounts that are payroll deducted pre-tax will be
       reimbursed to employee after the employee pays for
       their premium directly to the insurance company
Health Care Premium Reimbursement
                Plan
• Enrollment in the Plan
   – Employee must sign a Salary Reduction Agreement stating
     the amount to withhold from each pay check
      • Must provide a copy of the policy
          – Verify coverage of employee and dependents
          – Verify premium
      • Indicate on SRA the annual amount of premium
      • Salary Reduction Amounts cannot exceed amount of premium
   – Elections can change only if:
      • Premium Rate changed
      • Loss of coverage
Health Care Premium Reimbursement
                Plan

• Reimbursements of Premium
  – Employee will pay the premium
  – Employee will submit a Claim Form with a receipt showing
    premium paid
  – Employer will reimburse to employee amount of premium
     • Cannot reimburse more than what has been payroll deducted
     • If the amount of premium exceeds amount salary reduced, the
       excess claim will rollover into the following pay cycles in which
       reimbursements will be processed accordingly
     • The employee cannot be reimbursed for premiums paid before the
       effective date of the plan
Health Care Premium Reimbursement
                Plan
• Reimbursement of Premium
   – Employer will communicate how often reimbursements
     will be processed
   – Employer will communicate if there are any check amount
     minimums
   – Claims submission periods and year end closing periods
     will be communicated to the Employee
• The Employer is not responsible for any coverage
  that the employee loses for failure to pay a premium
  if the salary reduction election for Health Care
  Premium Expenses is insufficient to cover the
  premium amount.
Health Care Premium Reimbursement
                Plan

• Salary reductions that are in excess of
  premiums claimed and incurred during the
  plan year creating a balance at the end of plan
  year cannot be returned to the employee
• Other insurance benefits that are list billed
  will not be allowed as reimbursements
Health Care Premium Reimbursement
                Plan

• If the employee has an HSA qualified Health
  Plan:
  – Payroll deductions for the employee HSA funds
    can be processed in the POP part of the Café Plan
  – Employer will pay the contributions directly to the
    Trust Custodian on behalf of the employee
Health Care Premium Reimbursement
             Plan Set Up

• The following information must be completed
  by the Broker and Employer
  – To create complete and compliant Plan
    Documents as required by DOL
  – To create complete and compliant Employee
    Information Packets for communication and
    implementation of the plan
  – To create a simple recordkeeping system for the
    employer to track payroll deductions and claims
    for premium reimbursements
  Health Care Premium Reimbursement
               Plan Set Up

The following data gathering pieces are crucial to the proper set up of plan
documents and employee communication materials. These documents include an
Adoption Agreement, Plan Information Summary and Summary Plan Description.

The data is broken down into sections to help explain what is required and why.
  Health Care Premium Reimbursement
               Plan Set Up

Data Part 1:

Obtaining basic employer information for required documents must be given as
requested. For example: The name of the Company must be given as it is listed on
their tax filing reports. This holds true for the other fields within this section.
  Health Care Premium Reimbursement
               Plan Set Up

Data Part 1:

Name of Employer
______________________________________________________________
(enter name exactly as it appears on tax returns and is to appear on documents)
Employer / Owner Name _________________________
Benefits Coordinator ___________________________
Federal ID # _____--________________
Date incorporated / organized ___/___/___ Fiscal Year End ___/___
Mailing Address
______________________________________________________________
City ________________________________ State _______ Zip __________
Street Address _________________________________ State ______ Zip
________
Phone ____--_____--________ Fax ____--_____--_________
  Health Care Premium Reimbursement
               Plan Set Up

Data Part 2 and Part 3:

Knowing the type of business entity is crucial in determining eligibility of
participants. As you know, only employees are eligible to participate and in many
corporations. In many cases owners are not employees but actually considered self
employed even if they receive a W2.

Employers must include in the documents the state in which they do business and
their Industry Code. This is also useful for finding the proper insurance plans and
ensuring the agent is licensed in the proper states.

Before we begin Part 2 and 3 let us review the different types of corporate entities
for which a self employed status is created.
       Who is Self Employed
– Non C Corp Owners
  • S-Corp shareholders (2% or more and their immediate
    family members employed within the company)
  • Partnership (partners)
  • LLC members
  • Sole Proprietor
Health Care Premium Reimbursement
             Plan Set Up


Data Part 2:


 Organization Type: ___Corporation ___Sub Chapter ‘S’ ___Prof’’l Corp
                              ___Prof’l Assoc
           ___Partnership ___Sole Prop ___Govt Agency Other
                          ____________________
  The Organization operates pursuant to the laws of the State of ______
Nature of Business or SIC Code _______________________________
 Health Care Premium Reimbursement
              Plan Set Up

Data Part 2 cont’d:

                       Subsidiary Business Locations:
               Name ___________________________________
               Address__________________________________
               City ___________________State _____ Zip ______

              Name ______________________________________
              Address _________________________________
              City ____________________ State _____ Zip ______
 Health Care Premium Reimbursement
              Plan Set Up

Data Part 3:

                      Officers /Titles / Ownership
Name _______________________________ Title _____________________
% Owner __________
Name _______________________________ Title _____________________
% Owner __________
Name _______________________________ Title _____________________
% Owner __________

Please list employees who are family members of above owners / shareholders.
Name ________________________________
Relationship to who? _______________________
Name ________________________________
Relationship to who? _______________________
Health Care Premium Reimbursement
            Plan Set Up:
          Benefits Offered
• Plan documents must list all eligible benefits. We will start with the
  Premium Reimbursement for Individual Health Insurance.
• The effective date will be the effective date of the eligible insurance plan
  as long as it is within the plan year of the CAFÉ Plan.
• The employer will allow pre-tax premium reductions based on the amount
  the employee elects. Remember, this amount cannot exceed the actual
  premium the employee pays.
• The employee may payroll deduct the monthly or quarterly premium
  based on actual pay periods. You will then need to calculate the per pay
  period deductions.
Health Care Premium Reimbursement
            Plan Set Up:
          Benefits Offered
  HCPR :


           5.10 Individual Health Insurance Company ______________________
           Eff. Date ___/___/___
           Employee contribution of premium per pay period:
           Single       ______________$
           EE/Child ______________ $
           EE/Spouse ______________$
           Family      ______________ $
Health Care Premium Reimbursement
            Plan Set Up:
Part 4:   Benefits Offered
• Other eligible benefits may be listed within the Employer Sponsored
  Portion of the CAFÉ Plan. These will be benefits that the employer pays
  the premium on behalf of the employee directly to the insurance company
  based on a ‘List Bill’ the employer has received. There will not be any
  premiums reimbursed to the employee in these benefits.
• The effective date will be the effective date of the eligible insurance plan
  as long as it is within the plan year of the CAFÉ Plan.
• These elections cannot change within the plan year unless there is a
  qualified change in status or a rate change. However, the HSA
  Contribution can be changed anytime as long as the total election does
  not exceed the maximum IRS limits.
Health Care Premium Reimbursement
    Plan Set Up: Benefits Offered
POP Plan (These are employer sponsored and paid from group list bill):

      5.12 HSA Trust Custodian ______________________________
           Eff. Date ___/___/___
           Employer contribution of HSA per pay period:
           Single      ______________$
           EE/Child ______________$
           EE/Spouse ______________$
           Family      ______________$
Health Care Premium Reimbursement
    Plan Set Up: Benefits Offered
POP Plan (These are employer sponsored and paid from group list bill):



      5.3 Group Life Insurance ______________________________
          Eff. Date ___/___/___ Amount of Death Benefits $______________
          Employee contribution of premium per pay period:
          Single      ______________$
Health Care Premium Reimbursement
    Plan Set Up: Benefits Offered
POP Plan (These are employer sponsored and paid from group list bill):



  5.2 Other Supplemental Benefits offered by: ____________________________
      Eff. Date ___/___/___
      Type of Benefit: __ Cancer __ Accident __Illness __LTC
      __Other: __________________________

  Employee cost per pay period: Single   ______________$
    Health Care Premium Reimbursement
                 Plan Set Up
•   Part 5 of the data form relates to communication from employer to employee
    within the Summary Plan Description and Plan Information Summary . This
    information is required to be communicated to the employee for successful payroll
    deduction and reimbursement schedules and procedures.
  Health Care Premium Reimbursement
               Plan Set Up

Part 5:

Payroll Frequency: ___Weekly      ___Bi-weekly      ___Semi-Monthly ____Monthly
Number of Pay Periods per year: ____52       ___24      ___26    ___12
Payroll Deductions cycle: ___Weekly ___Bi-weekly ___Semi-monthly ___Monthly
Number of Deductions per year: ___52           ___24 ___26      ___12
Payroll Deductions to begin on what date _________________
Processing schedule:___ Daily ___Weekly ___Bi-weekly ____Monthly
Processing dates: Which day of the week will claims be processed? _____________
               Electronic Funds Transfer         Checks


                       Section 125 Plan Limits:
$__________ Maximum pre-tax contribution allowed per plan year per employee
(usually $15,000)
$__________ Minimum check amount for reimbursement (usually $10)
  Health Care Premium Reimbursement
               Plan Set Up

Part 6 information is plan year information. Plan years must be 12 months
unless they are initial plan years.

Part 7 is the information that does the following: A) places limits on
maximum amounts that may be payroll deducted based on the annual
salary of the lowest paid eligible employee. B) Communicates to the
employee administratively that checks will not be generated for under $10
unless it is at the end of the plan year to finish paying out the account for
qualifed expenses.
  Health Care Premium Reimbursement
               Plan Set Up

Part 6:

          Proposed Plan Year Dates For Sect 125:    Plan No. _______
                  POP Plan ____            HCPR FSA ____
                Begin Plan Year ____/____/___ to ____/____/___
               Next Plan Year ____/____/____ to ____/____/___

Part 7:

                       Section 125 Plan Limits:
$__________ Maximum pre-tax contribution allowed per plan year per employee
(usually $15,000)
$__________ Minimum check amount for reimbursement (usually $10)
Health Care Premium Reimbursement
             Plan Set Up

     Part 8 is the lengthy process of determining the proper way of setting up
eligibility requirements for employees that will not discriminate against anyone.
This format will help the employer determine who will participate according to
the rules of Section 105.
Health Care Premium Reimbursement
             Plan Set Up

Part 8:

Class of Eligible Employees: ____All ___Salaried Only ___Hourly Only

Eligible Employees:
1. Employees who are normally scheduled to work at least _____months per year
     2. Employees who are normally scheduled to work ____hrs per week
     3. Employees who are age ____ years old or older as of the plan effective date
     4. Employees who are members of union? ___yes       ___no
     5. Other ________________________________________________
 Health Care Premium Reimbursement
              Plan Set Up

Part 8 cont’d:

Service Period Requirements: (Choose one of the following)

1. ____ For the initial plan year, anyone employed on the plan effective date or
initial plan begin date. For subsequent plan years, one of the following applies:
                                      ___as of the date of hire
                                      ___number of days after the date of hire
                                      ___number of months after the date of hire

2. ___ For ALL plan years the following policy will apply:
                                    ___as of the date of hire
                                    ___number of days after the date of hire
                                    ___number of months after the date of hire
 Health Care Premium Reimbursement
              Plan Set Up

Part 8 cont’d:

Entry Date: (choose one of the following)

___Date eligibility requirements are met
___1st day of pay period following the date eligibility requirements were met
___1st day of the month following the date eligibility requirements were met
___1st day of the plan quarter following the date the eligibility requirements were
met
Claims grace days:

for termination _____ days (usually 90)      Plan year end:______
Health Care Premium Reimbursement
             Plan Set Up

Part 9 will complete the communication to employees of who to contact and
who administratively is responsible for the plan.
Health Care Premium Reimbursement
             Plan Set Up
Part 9:                 Plan contacts and responsibilities
Benefits Coordinator (communicates with the employees)
Name __________________________________________________
Title________________________________
Address ________________________________________________
City ______________________________ State ____ Zip ______
Acceptance of Legal Process (This person accepts the services of legal
process and also understands that the Premium Reimbursement Plan is not a
replacement for a previous group medical plan for discriminatory reasons. The
Premium Reimbursement Plan is being offered in a non-discriminatory manner
as outlined in the Eligibility portion of the Plan Setup)
Name __________________________________________________
Title________________________________
*Signature____________________________________ Date: ___________
Address ________________________________________________
City ______________________________ State ____ Zip ______
Health Care Premium Reimbursement
             Plan Set Up


Please refer to the Plan Set Up Packet to complete the
instructions for fees and set up
Health Care Premium Reimbursement
         Plan Recordkeeping

Please refer to the Excel Spreadsheet Example to Illustrate
How the program works

				
DOCUMENT INFO
Description: Corporate Resolution Format document sample