Section 105 Benefits Plan

Discussion in 'Employee Benefits Forum' started by smokin goose, Apr 28, 2013.

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  1. Zane Benefits
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    Zane Benefits Active Member

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    Basically, a Section 105 plan allows businesses to reimburse an employee for medical and insurance expenses incurred by the employee or his or her dependents.

    Section 105 plans are also frequently found in the form of Health Reimbursement Arrangements (HRAs). A businesses might also implement a Section 105 plan alongside a conventional employer-sponsored health insurance plan (to reimburse amounts not covered by insurance) or as a stand-alone medical reimbursement plan (to reimburse amounts for out-of-pocket health insurance premiums).

    All reimbursements are 100% tax deductible by the businesses and its employees. When designing a Section 105 plan, the business has enormous flexibility, such as establishing maximums amounts for reimbursement and setting eligibility requirements for participation. The biggest advantage to employees is that a Section 105 plan reimbursement is not considered taxable income.

    Most experts do not recommend self-administering a Section 105 plan because it is easy to overlook compliance obligations that put a business at financial risk. Section 105 plans need to comply with the following requirements:
    - COBRA - A Section 105 plan is subject to COBRA rules.
    - HIPAA Privacy - A Section 105 plan is governed by HIPAA Privacy rules.
    - Medicare Reporting - A Section 105 plan is subject to Medicare Secondary Payer (MSP) provisions.
    - Legal Plan Documents - ERISA requires that Section 105 plans be established and maintained pursuant to a written instrument.

    There are also Section 105 Nondiscrimination rules, which require that the plan must not discriminate in favor of highly compensated individuals (HCIs) with respect to eligibility to participate in the plan or benefits provided under the plan.

    BUT there are companies that will administer section 105 plans, and they are actually very simple in practice:
    (1) The business establishes a formal written Section 105 plan (administrators will usually write up these documents).
    (2) The business determines the amounts available to each employee for reimbursements during a period of coverage (generally a year).
    (3) As eligible expenses are submitted, the business reimburses the employees (100% tax-free) up to the available amounts.
    (4) Unused funds at the end of the year are typically carried over to the next year.
     
  2. Liberty4u
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    Liberty4u New Member

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    Sno do you know Joachim and what do you know about Gemni/Benasmart?
     
  3. smokin goose
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    smokin goose Well-Known Member

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    I've talked to several agents across the country and the word is that TFG's 105 did involve the loan advance.
     
  4. Nomorebs
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    Nomorebs New Member

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    Did you even read what you attached? Nothing in that judgement says they were shut down. What it says is that the TFG company will no longer say anything bad about the other company and will not tell people not to ignore other company as well as it will change two of the documents they used in the future. If you read the second part it says both parties agreed to this judgement but nothing about being shut down. It sounds like you are associated with the other company and are just trying to feed the people in this forum a bunch of false information. I will say your post did peak my interest and I dug into this matter and even went and found the original petition filed and then started investigating all parties associated. Now I know why you never wanted to mention who you called the original designer really was by name because after review of Benesmart and Michael Purr it was comical on who much legal problems they have had over the last five years with being an illegal insurance scam. So the question is do you work for this company? Second question is why are you purposely giving out wrongfully hurtful information about this other company TFG when it is perfectly clear you haven't done your research to get the facts straight? I do smell a rat snowman but I am beginning to think it is you!!!

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    At one point TFG marketed a life insurance that was associated with a product called the Gemini plan for another TPA that had a loan provision in their plan. But when TFG parted ways with that company in May of 2012 they designed a program called the Classic 105 and there is no loan or advance benefit with that plan. It is a true 105 plan that reimburse only after a claim has occurred. The best move they ever made was getting away from that other company.
     
  5. smokin goose
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    smokin goose Well-Known Member

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    Whether they partnered with a TPA that administered the loan component, they were still part of the overall deal.

    I'm just glad I never placed the program with any groups.
     
  6. Nomorebs
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    Nomorebs New Member

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    You are correct there Smoking Goose. Most of the clients that were on that Gemini plan with that loan provision have left the plan but believe it or not some actually stayed on that plan. Now that company is using the name Defined Benefit Solutions. TFG was misled by that company on several issues but once they had attorneys explain to them you can't do some of the things they were doing they ran as fast and as far away from them as possible.
     
  7. Taxmap
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    Taxmap New Member

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    Their is no complete truth to any story here. The TTFG information is incorrect as well as how the plan is delivered. The plan in question is regulated by the federal government and the company TTFG is audited every 90 days by the DOL, Department of Labor.

    If I were concerned about that company doing anything wrong then I would check to see if the DOL was auditing the company and then check if the DOL had shut them down. Once the DOL audits a company they are shut down automatically if everything is not in perfect order.

    The TTFG in IN which was not the same as the one in LA was selling a plan that did not meet IRS regulations. The other TTFG went on a campaign to save their business and was sued by the IN firm to stop contacting their clients and informing them of the fact the two companies had no relationship and no tax plan supported by the LA Brokerage Firm.

    That's the basic story and it is listed in the court papers of the lawsuit.
     
  8. jetsetter dream
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    jetsetter dream Member

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    Taxmap,

    Are you currently doing business with TTFG or any of the similar companies?
     
  9. kristileigh
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    kristileigh New Member

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    I, too, have been looking into the Section 105 plan that Total Financial implements. My understanding is that the implement a standard 105 plan. Nothing new there. The difference between the standard plan and their version is that they also secure a credit life insurance policy on the applicant, and the owner of the policy, Diamond Financial, loans the applicant a portion of the policy each month. Neither the policy or the loan is part of the 105 plan, and has separate paperwork.

    The loan from DF is not a reimbursement or advance for medical expenses. Just simply a loan. The IRS deems it legal as long as 2 requirements are met: reasonable expectation of repayment, and interest paid.

    I have personally taken all of the documents to several CPA's and Attorneys and had them review them. All have maintained that because the 105 and the credit life insurance are mutually exclusive, they are both 100% legal and provided for within the IRS tax code (which I am completely unfamiliar with). I also have in my hands the legal paperwork mentioned above that was written by two separate attorney groups.

    Based on what I have seen and the information I have been able to gather, this does seem to be a game changer. Any new information out there?
     
  10. leevena
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    leevena Well-Known Member

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    The use of life insurance in this manner, or variations of this manner, have been tried before. DOI's have been very reluctant to allow it.

    We can debate this all day long. May I suggest you take the idea to your state insurance department. I am sure they will provide you with an opinion about this strategy.
     
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