Holding the rebate in trust.
The Department of Labor guidance states that plan assets generally must be held in trust. Relief applies only to certain plan types and only if the rebate is used quickly.
What the letters and the guidance say.
Plan Assets Generally Go in Trust
The Department of Labor states that plan assets, which can include part of a rebate, generally must be held in trust.
Relief Is Narrow
The Department of Labor will not assert a violation for not using a trust for cafeteria plans and certain contributory welfare plans relying on its earlier technical release, and limited reporting exemptions apply, if the rebate is used within three months of receipt to pay premiums or refunds.
The Company Account Question
Holding plan assets in the general company account may not meet the trust requirement unless the relief applies. Confirm with an employee benefits attorney.
Three steps for the employer.
Decide Whether Relief Applies
Ask your adviser whether your plan type qualifies and whether you can use the rebate within three months of receipt.
If Not, Set Up a Trust or Redirect
Consider whether to hold the funds in trust or have the carrier apply the rebate directly to premium.
Keep the Money Identifiable
Whatever route you use, keep the rebate separate and traceable and keep a written record.
Three questions to settle first.
Does Our Plan Qualify for Relief?
Ask your attorney whether the plan is a cafeteria plan or a qualifying contributory plan.
Can We Use It Within Three Months?
Ask your adviser what a realistic schedule looks like from the date you received the check.
Where Is the Money Today?
Ask finance to confirm the check has not been commingled with general funds.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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