Cafeteria Plan Nondiscrimination Tests

Question: What are the cafeteria plan nondiscrimination tests, and what is the definition of highly compensated for each? Short Answer:  Each component of the cafeteria plan has a different set of nondiscrimination tests and the definition of highly compensated. Cafeteria Plan Nondiscrimination Testing (§125) a) Nondiscrimination Test Components Eligibility Test Contributions and Benefits Test Key […]

Severance Benefits May be Subject to ERISA

Question:  When are an employer’s severance benefits subject to ERISA? Short Answer: Severance benefits that are part of an ongoing administrative program with clear eligibility standards or benefit provisions are subject to ERISA.   General Rule ERISA §3(1) includes severance plans as a welfare plan subject to ERISA because they provide benefits in the event […]

COBRA 12-Month Determination Period

Question:  How do the 12-month COBRA determination period requirements apply where the plan year or premium changes mid-year? Short Answer: With some limited exceptions, the general rule is that the plan’s COBRA premium must remain consistent for a 12-month determination period. General Rule: 12-Month Determination Period The plan generally must keep a stable COBRA premium […]

Exchange-Related Permitted Election Change Events

Question:  When does an employee’s eligibility for Exchange coverage create a Section 125 permitted election change event to change an employer’s health plan election? Short Answer: In two limited circumstances (both of which are unrelated to eligibility for subsidies on the Exchange), employees may experience a Section 125 permitted election change event to revoke their […]

HSA Catch-Up Contributions

Question:  How do the HSA catch-up contribution rules work, and particularly how do they apply for married individuals? Short Answer: If both spouses are HSA eligible and at least age 55, each spouse may make a $1,000 catch-up contribution to their own HSA. Catch-Up Contributions: General Rule Individuals who are HSA eligible and age 55+ […]