Forums
self administer your own premium only plan
Benefits & Compensation
self administer your own premium only plan
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
[quote]
On 2000-06-08 08:36, aljh wrote:
You really don't need an adminsistrator for a premium only plan. Essentially all you are doing is deducting premiums pre-tax and applying that money to your
0
Cat:Topic ForumsForum:ForumId52
Cat:Topic ForumsForum:ForumId52Discussion:DiscussionId36360
Forums » Topic Forums » Benefits & Compensation » self administer your own premium only plan
|
self administer your own premium only plan
posted at 1/26/2010 6:48 AM EST
|
Posts: 2
First: 1/26/2010 Last: 1/26/2010 |
[quote]
On 2000-06-08 08:36, aljh wrote: You really don't need an adminsistrator for a premium only plan. Essentially all you are doing is deducting premiums pre-tax and applying that money to your health insurance premium. It can all be done internally by your accounting department. You need to follow the Section 125 regs, including having a plan document, (which an attorney, your benefits broker, or perhaps a full service accounting firm could set you up with). You will need to file an annual 5500 if the plan is large enough, but that too can be done in-house and it is relatively simple. You also need to do an annual enrollment. Perhaps a good seminar is all you need to get started. [/quote] This answer was posted in 2000 10 years ago! I am wondering why I cant adminster our POP. 1. I have less than a 100 employees. 2. I have a plan doc that I can just change the date and re-xerox each year. 3.I have a plan summary description. 4.The discrimination testing is not hard I have been paying my payroll service $350.00 a year, since 1997. I never got a plan doc or plan summary, I have not had Salary Reduction Agreement or Premium Only Plan Election Form. The only thing they did was have me fill out the same simple discrimation test and mail me the results a few weeks later. I dont think they even gave the discrimination test or the results of test to the IRS. Am I making this too easy or what? Is this not something a small company can do theirselves? thanks |
|
|
self administer your own premium only plan
posted at 1/26/2010 7:08 AM EST
|
|
Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
The trickiest parts are the nondiscrimination test and the plan document updates.
If you fail nondiscrim, then you have to deal with the premiums being aftertax for your HCEs. Depending how your payroll system is setup, this might be easy or complicated. And communicating it to the HCEs can be a little tricky. Have you ever failed? What are your percentages? Are they close to 25% (if I remember the % correctly)? There were significant changes to the 125 laws in the last few years, so I would suggest paying to get a new document written. I got one from Core Documents for $99 (and I very rarely pimp a vendor,but they did a fast, awesome job in a pinch for me.) I would get one at changeover so that your direct liability starts with a document that you KNOW is up to date with current law. And the employees get a fresh up to date SPD. But I administer ours....and create all the election forms each year. I have had an employee chose to elect OUT of the 125 because he was considering switching to a personal co-op plan, but this year, elected back into the 125. And you have to be up to date on what is a "qualifying event". There is a good website called www.changeofstatus.com that can be very very helpful in that regard. |
|
|
self administer your own premium only plan
posted at 1/26/2010 7:20 AM EST
|
|
Posts: 2
First: 1/26/2010 Last: 1/26/2010 |
Thanks, ...another question...
...do you file anything with the IRS? We are very small and do not need to do a 5500. I cant find anywhere what you are supposed to do with the results of the testing. I am wondering what you do with your discrim test results? Of course if you fail you have to make it right, that is why some websites suggested several tests throughoutthe year. But pass or fail do you ever send anything to the IRS or DOL? Again thanks! |
|
|
self administer your own premium only plan
posted at 1/26/2010 9:11 AM EST
|
|
Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
No, you don't file anything. However, you need to keep all the records in case of an audit. I would highly recommend not administering your own plan though. I know the chances are virtually zero that you will get audited, but if you do, think about the costs associated with one. If you have a Section 125 administrator, they do just about all the work for you.
I always use the law firms I deal with as examples. They do not administer their own Section 125 plans or COBRA or do their own 5500's. The opportunity cost is just too great. |
|
|
self administer your own premium only plan
posted at 1/26/2010 11:52 AM EST
|
|
Posts: 2
First: 1/26/2010 Last: 1/26/2010 |
We have a life insurance company take care of ours. We pay 100% of the life insurance. They will administer ours for free. Our only benefits are health and dental. We only have 30 people, and only one key employee and since we are an S-Corp, she isnt even eligible for the POP. |
|
|
self administer your own premium only plan
posted at 1/26/2010 4:41 PM EST
|
|
Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
Nope, our company is too small to need a 5500 so I just file the discrim test results in case of audit.
I don't admin COBRA and our 401k TPA handles our 5500s for that plan, but the 125 is so much simpler than either of those. Sometimes either your broker or one of the insurance carriers will do it for free as a value-added service. But then again I have 7 1/2 years of nondiscrimination test experience under 401k plans with a major HR consulting firm including a VCP application with the IRS where we were able to argue that the mistake was minimal. I also have done mid-year and year end testing for the 401k outside of our TPAs. So a nondiscrimination test under 125 is comparitively very easy. But that is with quite a bit of experience in the field. |
Forums » Topic Forums » Benefits & Compensation » self administer your own premium only plan
