ERISA Compliance

A: Yes, the Executive Physical appears to clearly qualify.

The Executive Physical, a routine annual physical examination, qualifies as preventive care.

The employer can pay for the executive physical examination on a pre-tax basis.

A: Yes, HRA’s could be used to fund the program.

As a consequence of the carve-out in Treas. Reg. § 1.105-11(g) for routine medical examinations, the employer could pay for the Executive Physical feature of the Human Longevity Executive Program on a pre-tax basis under an HRA or under the terms of the employer’s self-funded group health plan. The benefit in this instance would not run afoul of the Code § 105(h) non-discrimination rules by virtue of the exception for medical diagnostic procedures (that include medical examinations).

Subsections 1861(ww), 1861(ddd) and 1861(hhh) of the Social Security Act define each of “an initial preventive physical examination” and “personalized prevention plan services” as “preventive services.”

IRS Notice 2004-23 (as amplified by subsequent guidance) takes a similar position, stating that “periodic health evaluations, including tests and diagnostic procedures ordered in connection with routine examinations, such as annual physicals” (emphasis added) are considered part of the “preventive care safe harbor” for purposes of Code § 223(c)(2)(C).

Additionally, IRS Notice 2004-23 provides a short hand test for deciding whether care is preventive or not – preventive care generally does not “treat any existing illness, injury or condition.”

Treas. Reg. § 1.105-11(g) provides an exception from the non-discrimination rules set out under Code § 105(h) for “medical diagnostic procedures” such as “routine medical examinations.” Specifically, “an employee’s annual physical examination…is not subject to the nondiscrimination requirements” (emphasis added). The Executive Physical is, by definition, a “routine medical examination” such as an “annual physical examination,” and thus is not subject to the non-discrimination rules. That it might be more detailed and incorporate emerging science should not change this result in our view.

As a consequence of the carve-out in Treas. Reg. § 1.105-11(g) for routine medical examinations, the employer could pay for the Executive Physical feature of the Program on a pre-tax basis under an HRA or under the terms of the employer’s self-funded group health plan. The benefit in this instance would not run afoul of the Code § 105(h) non-discrimination rules by virtue of the exception for medical diagnostic procedures (that include medical examinations).

A: No, the Concierge Care & Second Opinion appear not to qualify.

These two areas are not considered preventative because they may be classified as “treating an existing illness, injury or condition.”

Employees receive these two services as part of their Executive Physical package, and Marqi provides employers with reporting for ‘imputed income’ to be included in the executive’s W-2 for tax purposes at the end of the year.*

If the employer pays for the Concierge Care & Second Opinion on behalf of an executive attending the Human Longevity Executive program, this would involve imputing income annually in the amount of the premium value of the taxable HRA coverage.

These amounts are also subject to payroll taxes and withholding at the source, which must be done at least quarterly (since the employer’s Form 941s must be filed quarterly).