IMPACT OF MILITARY LEAVE ON CAFETERIA PLAN BENEFITS

Due the the recent events, the Nation remains on alert and many in our Military have already been called to duty. It appears likely that military reservists and the National Guard will be called in significant numbers.

If you should have any employees that are called to active duty, the IRS has made it clear that the intent of the law is "not to penalize anyone in that situation." The IRS has stated that benefits should be treated as "analogous to FMLA leave, "whereby employees could come back on a pro-rated basis and preserve their benefits including Unreimbursed Medical. If you have anyone that is called to duty and is under the Cafeteria Plan they can drop all insurance benefits and pick them up when they return or use any of the options below.

1). The employee can be given the opportunity to pre-pay the contributions with before or after dollars the employee is expected to owe during the leave of absence.

2.) The employee can volunteer to reduce his or her final paycheck to make a special salary reduction of all or part of the expected duration of leave.

3.) The employee pay as they go with post-tax dollars or pre-tax dollars to the extent that the employee receives compensation.

Of course, the employer can continue to pay the deductions and catch up when the employee returns of leave.

Under the Uniformed Services Employment and Reemployment Rights Act of 1994 an employee should also be given the opportunity to revoke their Unreimbursed Medical election for the remainder of the coverage period. If the employee takes this option they are not entitled to receive reimbursements for claims incurred during the period after the coverage is terminated.

Should you have any questions regarding Military leave and your plan, please contact our office.

CAFETERIA PLAN RE-ENROLLMENT

If you plan is coming up for re-enrollment please notify all employees of the enrollment schedule. It has been our experience that letters are not always read, so please follow up with emails and meetings. This will help expedite the enrollment and ensure that no one is caught by surprise.

5500 YEAR END FILING

Please remember that at the end of your plan year, we will be contacting each employer for the following information:

1). Total pre-taxed insurance premiums during the plan year. Although we track this information, due to terminations and rate changes our totals will differ. Our totals for Dependant Care and Unreimbursed Medical are accurate, therefore, it is not necessary to provide those totals.

2). Total employer paid insurance premiums. These are the premiums the employer pays on behalf of the employees.

This information is necessary to complete your plans annual return to the Dept. of Labor.