Module 3 Concept Of Choice Flashcards
What does the term specific stop loss mean?
In a specific stop loss plan, the employer elects the amount per plan participant for maximum liability per person can range from 10,000 up to $1 million
The average tends to be 4 to 6% of annual Claims cost
What’s the difference between specific stop loss and aggregate stop loss plans
Specific stop loss plans address maximum liability per plan, participant and aggregate. Stop loss plans, protect the employer, if actual claims for all participants exceeded as specified amount.
In regard to aggregate, stop loss plans what is the recommended percentage of coverage as associated with with last year’s claims total
The stop loss aggregate should be set at 115% of the previous years coverage
What does the term lasering mean in regard to stop loss programs?
Vendors can exclude a specific plan participant from the coverage. If they know that a specific plan participant has an underlying health issue that will cause the participant to hit the stop loss value.
Contracts can be written to exclude lasering
What legislation applies to self insured plans
The employee retirement, income securities act (ERISA).
Self insured plans are not required to comply with state mandates. It’s important to consider what the state mandate is because following it may be in the best interest of providing coverage to employees and protecting employees health.
What’s the purpose of IRC section 125
Offers choice at a cafeteria style plan
Allows employers to establish a plan to offer employees an opportunity to pay certain benefits at a pretax basis, allowing them to increase their take home pay
What are the two types of section 125 plans
Cafeteria (Full flexible, benefits plan)
Premium only plan (POP)
Regarding section 125 plans, how does a premium only plan work?
Employees can choose to either receive their entire salary is cash, or they can use part of their salary to pay their share of premiums for the benefits they select
Premiums are prayed on a pre-tax basis
What are the two most popular benefits under IRC section 125?
Flexible spending accounts (FSA)
Health savings account (HSA)
What benefits cannot be included in a cafeteria plan under IRC 125
Long-term care
Dependent group life
Fringe benefits
Define benefit pension plan
Group legal services
Tuition reimbursement
Under IRC, section 125 employees can set aside money on a pretax basis to pay for eligible medical independent care expenses.
What happens to funds in an FSA at the end of the plan year?
If an employee does not spend their entire election amount by the end of the plane year, the employee forfeits the unspent funds back to the employer
Utilizing a dependent care spending account, according to IRC 125 , how much can an employee set aside for dependent care?
Between $2500 and $5000 dollars, depending on federal tax filing status annually
In regard to dependent care spending account when does an employee have access to the payroll deducted funds?
An employee only has access to funds after the deductions are deposited in the account.
What are the tax implications for dependent care spending accounts under IRC 125
Amount deducted and set aside. An employee accounts are free from federal taxes, Social Security and federal insurance, contributions act state, and local taxes.
Which of the following best defined section 125 plans
Written plans that allow employees to choose between cash and one or more employer provided benefits
Written plans that detail what the employer may use to attract retain and motivate employees
Written plans that allow employees to choose from a limited number of benefits packages
Written plans allow employees to offer a wide variety and employee benefits choices
Written plans that allow employees to choose between cash or more employer provided benefits
