1. Benefit Traps For The Unwary Common Benefit Plan Mistakes Made By Employers Presented by: David B. Wilson, Hirsch Roberts Weinstein Barry Newman, The Wagner Law Group Colleen Doherty, Eastern Benefits Group

2. Benefit Traps Q&A Question #1 It is the responsibility of the insurance carrier, not the employer, to distribute SPD’s (summary plan descriptions). Answer: True or False?

3. Benefit Traps Q&A Question #1 It is the responsibility of the insurance carrier, not the employer, to distribute SPD’s (summary plan descriptions). Answer: False It is always the responsibility of the employer (plan sponsor) to distribute SPD’s to all plan participants.

4. Benefit Traps Q&A Question #2 Employee John’s 23 year old non- dependent son is covered by his company-sponsored family health insurance plan. This coverage is considered imputed income to John and must be legally reported to the taxing authorities by the Company. Answer: True or False?

5. Benefit Traps Q&A Question #2 Employee John’s 23 year old non- dependent son is covered by his company-sponsored family health insurance plan. This coverage is considered imputed income to John and must be legally reported to the taxing authorities by the Company. Answer: False Under revised IRS regs - children of the employee (regardless of tax dependent status) may participate in the employer’s health plan with no imputed income to the employee.

6. Benefit Traps Q&A Question #3 An employer has a practice of offering a lump sum severance payment to terminated employees in exchange for a release. This practice constitutes an ERISA plan, such that the employer is legally required to have a Summary Plan Description (SPD) and to file a form 5500 annually. Answer: True or False? Severance Agreement ------------------------- ------------------------- ------------------------- John Doe Severance Agreement ------------------------- ------------------------- ------------------------- John Doe ABC Co. SPD

7. Benefit Traps Q&A Question #3 An employer has a practice of offering a lump sum severance payment to terminated employees in exchange for a release. This practice constitutes an ERISA plan, such that the employer is legally required to have a Summary Plan Description (SPD) and to file a form 5500 annually. Answer: False

8. Benefit Traps Q&A Question #4 A Massachusetts employer with a fully insured health plan can offer a more comprehensive health plan to executives than it offers to other employees. Answer: True or False?

9. Benefit Traps Q&A Question #4 A Massachusetts employer with a fully insured health plan can lawfully offer a more comprehensive health plan to executives than it offers to other employees. Answer: False The MA Dept. of Insurance prohibits carriers from offering discriminatory plans in Massachusetts. (Different rules apply for self insured plans.)

10. Benefit Traps Q&A Question #5 A former employee elects COBRA, but stops making payments after a few months. Once the employee is more than 30 days late, the employer can cancel the former employee’s coverage retroactive to the date covered by the last payment. Answer: True or False?

11. Benefit Traps Q&A Question #5 A former employee elects COBRA, but stops making payments after a few months. Once the employee is more than 30 days late, the employer can cancel the former employee’s coverage retroactive to the date covered by the last payment. Answer: True HOWEVER A notice of termination is required!

12. Benefit Traps Q&A Question #6 If an employee has been terminated and is receiving severance pay, an employer can lawfully keep the former employee on the Company’s health insurance plan during the severance period, with COBRA kicking in thereafter. Answer: True or False?

13. Benefit Traps Q&A Question #6 If an employee has been terminated and is receiving severance pay, an employer can lawfully keep the former employee on the Company’s health insurance plan during the severance period, with COBRA kicking in thereafter. Answer: True BUT Not without the consent of the insurance or stop loss carrier!

14. Benefit Traps Q&A Question #7 Health insurance documents, like enrollment forms, should be stored in an employee’s personnel file. Answer: True or False?

15. Benefit Traps Q&A Question #7 Health insurance documents, like enrollment forms, should be stored in an employee’s personnel file. Answer: False

16. Benefit Traps Q&A Question #8 Employers in Massachusetts must offer a Section 125 plan. Answer: True or False?

17. Benefit Traps Q&A Question #8 Employers in Massachusetts must offer a Section 125 plan. Answer: Dave answer

18. Benefit Traps Q&A Question #9 Massachusetts employers who offer health insurance to all employees regardless of the hours they work are likely to fail the fair share test. Answer: True or False?

19. Benefit Traps Q&A Question #9 Massachusetts employers who offer health insurance to all employees regardless of the hours they work are likely to fail the fair share test. Answer Dave Answer