New small business employee benefit plan

I am pleased to introduce Freedom Benefits’ new small business flexible consumer driven employee benefit plan for 2018. Three new features are incorporated immediately: 1) Increased opportunities to waive the setup and advisory fees by working through an affiliate accountant or agent, 2) increased range of insurance options to include non-ACA compliant health insurance, and 3) easy online license agreement for insurance agents or accountants who want to offer the plan services to their clients.

The plan is available immediately but some of the 2018 insurance options are not available until next year.

Below is a reprint of the introductory description:






Freedom Benefits is pleased to present this summary description explaining the Small Business Consumer Driven Employee Benefit Plan available to your business.



The purpose of this employee benefit plan is to provide robust and flexible options to small business employers. The plan incorporates a more attractive options for covering health care expenses and other employee benefits that allow employees to individually select the most attractive option or combination of options.



The benefits described in this plan are available to small business employers in the United States. Normally all full-time employees are eligible to participate in the plan although individual non-insurance components of the plan may have more restrictive eligibility requirements. A qualifying employee will be eligible to participant on the first day of the month following the date he or she becomes eligible for benefits.  A former participant will become a participant again if he or she meets the eligibility requirements above. You may elect to cover part-time or seasonal employees or independent contractors at your option.



This benefit plan: a) pays eligible medical expenses incurred by an employee or the employee’s dependents or, b) allow employees to set aside a portion of their pay for expenses that they may incur or. c) save money for the future for retirement or some other purpose, or d) provide some other specified benefit to employees.

Benefits are provided through one or more of the following health plan vehicles that are collectively described as a “Consumer Driven Employee Benefit Plan”:

1) Group Health Insurance

2) Health Savings Account (HSA)

3) PPO Discount Pricing Service (PPO)

4) Health Reimbursement Arrangement (HRA)

5) Flexible Spending Account (FSA) including Dependent Care Plan

6) 401(k) Plan

7) Pension Plan

8) IRA or SEP Retirement Savings Plan

9) Deferred Compensation Plan

10) Thrift Savings Plan

11) Other benefits specified by the employer

Participation in each of these five types of health plans is based on your selections as the employer, individual employee selections, federal and state laws, local health plan practices and other factors. Not all employees are eligible for all of these types of employee benefits, however the employer intends to make as many of these options available to employees as is practical in the current market and legal situation.

The maximum dollar amount of benefits available under the plan is established by the employer in the plan document. Your maximum benefit under the plan is the dollar amount of benefit accrued for the current year plus any unused benefits that may be carried forward from prior years, subject to limitations.



In most cases the goal is to provide employee benefits that are tax deductible to the employer and tax-free to the employee. Benefits are typically not taxed as wages so both the employer and the employee pay less tax when an employee elects to participate in a voluntary tax-qualifies employee benefit plan. To achieve maximum tax benefits, the employer’s administrative and payroll procedures must adhere to established tax regulations. This plan includes the option to incorporate benefit options that are not tax-qualified employee benefits.


There are four possible costs of this employee benefit plan: a) insurance, b) non-insurance benefits, c) Plan Adviser, d) Plan Administration.

Insurance costs are determined by the insurer under parameters set by federal and state laws. Non-insurance benefit plan costs are described in separate documents.

The fee of the Plan Adviser is $450 per year unless the fee is waived as described below. The Plan Adviser fee is waived if the employer is contracted with a Freedom Benefits affiliate to provide: a) payroll services, b) insurance services, or c) accounting services. If the fee is waived then the Plan Adviser services are provided without fee.

Plan Administrative costs vary and are described in separate documents.



Benefits may be paid for by employees or by the employer, or a combination of both employees and the employer. The employer pays for all benefits in a Health Reimbursement Arrangement. Voluntary employee contributions are allowed in a Flexible Spending Account. Either the employee or the employer may pay for Health Insurance, PPO benefits or a Health Savings Account.



Only “eligible expenses” can be covered by the Health Plan. To be eligible an expense must meet all the following requirements:

  1. An expense for health insurance or a tax-qualified medical expense as listed in the current version of IRS Publication 502 that is not covered by insurance or reimbursed by another source.
  2. An expense incurred by you or any person who is a dependent on your income tax return.
  3. An expense incurred during the plan year (or in some cases within 90 days after the end of the plan year).
  4. If you are also covered by a Health Savings Account, then a covered medical expense under this plan may not include any expense that would otherwise be applied to your health insurance policy deductible.

Expenses that are not “eligible expenses” may be covered by another type of employee benefit plan.



All communications relating to this benefit plan are sent by electronic mail.  It is presumed that employees have given written authorization to the employer for delivery of e-mail communications and that employees regularly have access to a private secure e-mail address. If this is not the case, please immediately notify the plan adviser for alternate administration procedures.

As employees incur eligible expenses, they may be eligible for reimbursement from the employer under some benefit plans. To validate the disbursement as a valid claim under the plan and a tax-free benefit, employees must submit a claim form and a receipt to the administrator as described in the Claim section below.  Employees may be required to provide supporting documentation with the claim form if requested describing when the expense was incurred, the type of expense, the amount of the expense and who was paid.  If the expense is eligible, the disbursement is tax-free. If the reimbursement request is rejected as not eligible, the employee will be notified why and the disbursement is taxable.

Claims must be submitted in the format specified by the employer. Claims accounting will be performed periodically on a schedule established by the employer, usually on a quarterly basis, but not less frequently than once per year and no later than 90 days following the end of the employer’s tax reporting year.

All taxpayers are responsible for the validity of the information on their own tax return.  Similarly, you are responsible for making certain, to the best of your ability, that all expenses submitted for reimbursement are eligible expenses. Expenses must be incurred during the plan year to be eligible but the claims do not have to be reported during the plan year.

Claims submitted during the three calendar month period after the end of the plan year will be accepted for payment. Claims submitted later than that may be considered at the discretion of the Plan Administrator.



The entry dates for the plan are its effective date and the first day of any month thereafter. Every eligible employee is automatically enrolled in the benefit plan on their eligibility date. Employees may elect to not be enrolled by giving written notice to the plan administrator.



Participation in the plan will cease at termination of employment. Some benefits continue to the end of the month following date of termination. Employees may continue to submit eligible expenses for reimbursement but only if they were incurred prior to the date of termination. All monies remaining in the health reimbursement account will return to the employer. Other employee benefits may have cash benefits that are vested to the employee.



The Plan Administrator is the plan agent for service of legal process and is responsible for the administration of the plan, for filing all forms required by the Treasury and Labor Departments and for furnishing the Participants with information concerning the plan.   The Plan Administrator determines the eligibility of employees to participate in the plan,

Interprets the provisions of the plan and establishes rules and regulations for its operation. There may be more than one Plan Administrator, especially if the plan has multiple benefit components.



Plan Adviser: Tony Novak

Address: P.O. Box 333, Newport NJ 08345

Telephone: (800) 609-0683

Fax: (888) 581-0748


The plan adviser is responsible for providing single-source support about benefit plan design, setup, enrollment and administrative questions directly to the employer and the employees as directed by the Plan Administrator. The Plan Adviser is available by telephone or e-mail to answer any questions that you may have about your benefit plan. Plan Adviser services do not include billing or payroll services, claim services or administration services.



Health insurance plans handle their own claim administration independently of the Employer and this Plan according to the procedures described in the specific insurance policy.



PPO discount plans are responsible only for the re-pricing of health service invoices and are not involved in the payment of claims.  This is not insurance.  PPO discount plans handle their own re-pricing service administration independently of the Employer and this Plan according to the procedures described in the membership materials.



The Claim Administrator under the Health Reimbursement Arrangement (HRA) and the Flexible Spending Account (FSA) is the Plan Administrator listed above who is responsible for validating claims made.  The Claim Administrator has the responsibility for validating claims filed under the plan to allow for tax-free reimbursement while maintaining privacy of employees’ information.  The Claim Administrator is not the Employer.  Employees are not required to provide any medical information to the employer, nor will the employer request any personal medical information from employees.


Claims will be validated within 30 days after the end of the accounting period or plan year.  Claim validation will be completed by the Claim Administrator on a monthly, quarterly or annual basis at the option of the employer.  The Employer will make cash reimbursements shortly after the claim validation report is prepared.



To receive benefits provided under the plan through reimbursements, a written request must be filed with the Claim Administrator on a timely basis on such forms as the Claim Administrator shall provide.


The claim form is available from the Plan Administrator, the Plan Adviser or the Claim Administrator as applicable for the specific benefit. A claim may be submitted online or may be printed and mailed or faxed to the Claim Administrator as provided on the claim form.

Plan Participants should keep a copy of all forms sent to the claims administrator.

The Claim Administrator may require that receipts, canceled checks or other evidence substantiating the amount of the expenditure and the character of the claim be submitted to support the claim.  The Claim Administrator will review the claim and within a reasonable period of time (not to exceed 90 days after the receipt of the claim or the end of the plan year) notify the claimant of the disposition of the claim.  If the claim is honored, a written confirmation of same will be sent to the employee.  If the Claim Administrator denies the claim in whole or in part, it will provide written notice to the claimant of the denial of the claim and such notice will set forth

  • Specific reasons for the denial,
  • Specific reference to the pertinent plan provisions on which denial is based,
  • A description of any material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary, and
  • Appropriate information as to the steps to be taken if the claimant wishes to submit his or her claim for review.

A claimant may request that the Plan Administrator review a denied claim.

A claimant or his duly authorized representative may (i) request a review upon written application to the plan, (ii) review pertinent documents, and (iii) submit issues and comments writing.

In the case of any benefit provided under the plan by reimbursement, all claims for reimbursement for expenses incurred with respect to a plan year must be submitted to the Claim Administrator no later than the end of the third calendar month following the end of the plan year.  Claims submitted after that date may be declined on the basis of late submission.  In the event that a submitted claim has not been confirmed as received by the Claim Administrator by the end of the plan year, please contact the Claim Administrator in person.

Any request for a review of a denied claim must be made in writing within 60 days following the receipt by the claimant of written notification of denial of his claim.  The Plan Administrator shall review any denied claim upon timely filed request of the claimant within 60 days after receipt of a written request for review, unless special circumstances require an extension of time for processing, in which case the decision shall be rendered as soon as possible but not later than 120 days after, receipt of the written request for review.  If such an extension of time for review is required because of special circumstances, written notice of the extension shall be furnished to the claimant prior to the commencement of the extension.  The decision on review will be in writing, will include specific reasons for the decision and will be furnished to the claimant within the time indicated above.  If the decision on review is not furnished within such time, the claim shall be deemed denied on review.  In any cases in which a Participant establishes that he will incur fixed periodic expenses with respect to which the Participant elected to be reimbursed under the plan, the Plan Administrator may, upon receipt of such assurances and substantiation of those expenses as the Plan Administrator deems appropriate, make periodic reimbursements to the claimant as those expenses are incurred.  In such cases, the Plan Administrator may, in its sole discretion, excuse the Participant from making claims for reimbursement for some or all of those expenses.



Employee benefit plans are typically operated on a calendar year basis to meet legal requirements and integrate with tax laws. This means that the first plan year and the last plan year may be a Short Plan Year. For plans started in the 4th quarter of the year, the plan is presumed to be automatically renewed for the following year.



In no event shall the Employer be obligated under this plan to create a fund or segregate any assets for the purpose of paying benefits available under this plan.  The establishment of a Consumer Driven Health Plan shall not create any right on behalf of any Participant to any specific assets of the Employer or in any way be construed to represent that the obligation to pay amounts under this plan, whether by reimbursements or otherwise, is secured or funded.

All benefits payable under this plan, whether through reimbursements or otherwise, are nontransferable and non-assignable, and any effort by a Participant to assign these benefits to any person, including any provider of services with respect to whose fees, charges or costs may be reimbursed under this plan, shall be void.



The Employer typically intends to continue this plan indefinitely; however, in order to afford protection against unforeseen circumstances, the Employer reserves the right to change, modify, suspend temporarily or discontinue the plan.



Employee’s rights to benefits under this plan are intended to be legally enforceable, but neither the establishment of this plan nor any amendment thereof will be construed as granting to any other person (including any provider of services) any legal or equitable right against the Employer or the Plan Administrator.  This plan shall be maintained for the exclusive benefit of employees.



The plan may be amended or may be terminated by the Employer at its discretion at any time.



Federal and state laws require mot types of employee benefits to maintain plan documents. The Plan Adviser will provide guidance and sample or prototype documents on request but only an attorney can provide legal documents.

A Summary Plan Description summarizes the principal terms of the plan and does not purport to be the complete plan.  A copy of the Plan Document and other documents which have been incorporated by reference are maintained in the office of the Employer for Employee inspection, and Employees are encouraged to review them and to direct and questions you have to the Plan Administration, Employer or Employer’s legal counsel.  In case of any conflict between the contents of the plan and this Summary Plan Description, the provisions of the plan shall be controlling.



As a participant in the Consumer Driven Health Plan, Plan Participants are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA).   ERISA provides that all plan participants shall be entitled to:

Examine, without charge, at the plan administrator’s office and all plan documents including insurance contracts, copies of all documents filed by the plan with the U.S. Department of Labor, such as detailed annual reports and plan descriptions.  (These reports may not be required of small business health plans).

Obtain copies of all plan documents and other plan information upon written request to the plan administrator.  The administrator may make a reasonable charge for the copies.

In addition to creating rights for plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan.  The people who operate your plan, called “fiduciaries” of the plan, have a duty to do so prudently and in the interest of you and other plan participants and beneficiaries.  No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA.  If your claim for a welfare benefit is denied in whole or in part you must receive a written explanation of the reason for the denial.  You have the right to have the plan administrator review and reconsider your claim.

Under ERISA, there are steps you can take to enforce the above rights.  For instance, if you request materials from the plan and do not receive them within 30 days, you may file suit in a federal court.  In such a case, the court may require the plan administrator to provide the Materials and pay you up to $100 a day until you receive the materials, unless materials were not sent because of reasons beyond the control of the administrator.

If Participants have a claim for benefits, which is denied or ignored, in whole or in part, the Participants may file suit in a state or federal court.  If it should happen that fiduciaries misuse the plan’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the court.  The court will decide who should pay court costs and legal fees.  If you are successful, the court may order the person you have sued to pay these costs and fees.  If you lose, the court may order you to pay these costs and fees, if, for example, it finds your claim is frivolous.


Other non-health employee benefit plans have rights outside of ERISA as described in separate documents.



If you have any questions about your benefit plan, you should contact the Plan Adviser or the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, you should contact the nearest Office of the Pension and Welfare Benefits Administration, U.S. Department of Labor.




Revised 8/26/2017


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