Infinisource Provides Input on Cafeteria Rules

November 12, 2007

Since they were issued in early August 2007, the Proposed Cafeteria Plan Regulations have created a stir in the benefits community. In many respects they have given us much needed guidance on a variety of issues related to Section 125 plans and their component benefit options. However, many open issues remain.

For years, Infinisource has been among those in the forefront of reviewing and commenting on proposed regulations and other rules. The Proposed Cafeteria Plan Regulations are no exception. Recently, Infinisource sent extensive written comments to the IRS on these rules to clarify several areas of concern to plan sponsors and insurance brokers alike. All told, there were 12 recommendations, including the following:

• Expand the current benefit option of paying for individual coverage to include an employee's spouse's COBRA or individual coverage.
• Clarify that a spouse, dependent or any other individual acting as a legal representative or possessing power of attorney may make elections on behalf of an employee in certain circumstances (e.g., incapacity).
• Consider expanding the 30-day retroactive, optional election rule for new hires to address other similar situations:
• Rehires who are hired within 30 days
• Employees who are subject to a benefit waiting period
• Those with a HIPAA special enrollment for acquisition of spouse and dependent through marriage and loss of other group health coverage
• Clarify and expand the Advance Payment Rule for Orthodontia to other analogous situations.
• Change when a plan may terminate debit card use for an FSA. Currently, it would appear that a debit card might have to be offered for FSA participants on COBRA.
• Of course, Infinisource can assist in this area, by offering employers and insurance brokers our POP Subscription Service. This provides all the documentation you need. To find out more, call Infinisource at 800-779-6384 or e-mail us at solutions@infinisource.net.