We’re Here for You
Yes. Employers must commit themselves to certain rules about benefit payments, and the plan must be made clear to the employees.
The employer must complete and sign the Non-Discriminatory Medical Reimbursement Plan Adoption Agreement. Employees will receive a Summary Plan Description along with their certificate of insurance booklet.
Generally, the benefits are not taxable to the employee, and the employer may deduct 100% of the cost of the benefits paid to the employee; this is under Treasury Reg. §1.162-10(a) and Section 105(e) of the Tax Code. However, there are additional restrictions, and the regulations and tax code provisions should be reviewed with your tax advisor.
The plan must: provide benefits for 70% or more of the employees; and, benefit 80% or more of those employees participating in the plan; or, benefit a classification of employees that does not discriminate in favor of highly compensated employees.
Most welfare benefit plans are required to complete a reporting document such as Form 5500; however, there is a small welfare plan exemption. This exemption applies to plans with fewer than 100 participants who are fully insured and/or benefits are paid out of the general assets of the business on a pay-as-you-go basis. Also, these plans are not required to file a Summary Plan Description.
Yes, all COBRA benefits apply. Additionally, individual State Continuation Benefits may apply depending on which state the business is located in. Regardless of where the employer is located, we suggest that if the state offers any type of Continuation Benefits, the employer extends the plan to match those benefits.