Alabama Administrative Code › Title 560 - ALABAMA MEDICAID AGENCY › Chapter 560-X-22 - NURSING FACILITY REIMBURSEMENT › Section 560-X-22-.17 - Qualified Retirement Plans

Current through Register Vol. 42, No. 9, June 28, 2024
(1)
			 The reasonable costs of funding "qualified" deferred compensation plans will be
			 recognized as an allowable cost. "Qualified" deferred compensation plans means
			 those plans which have been determined by the Internal Revenue Service to be
			 qualified under Sections 401 or 405 of the Internal Revenue Code, as amended.
			 Such plans can be generally categorized as either a defined benefit
			 (hereinafter called "pension") or defined contribution (hereinafter called
			 "profit-sharing") plan.
(2) Under
			 a pension plan, the employer's contributions can be calculated based on the
			 definitely determinable benefits provided for in the plan and such
			 contributions are required without regard to the employer's profits. Pension
			 plans typically provide that forfeitures resulting from termination of
			 employees prior to their becoming one hundred percent (100%) vested in their
			 account balance will be used to reduce further employer contributions, rather
			 than being reallocated among the participants. The reasonable costs of a
			 provider in funding such a pension plan will generally be considered as
			 allowable costs, provided that the plan contains the usual provisions
			 concerning use of forfeitures to reduce employer contributions (and therefore,
			 Medicaid reimbursable costs). The portion of the provider's reimbursed costs
			 under such plans which is attributable to the costs of funding the retirement
			 benefits of employees whose compensation is includable in computing the
			 administrative and management costs of this chapter will be considered as part
			 of the compensation of each such employee during the year of contribution to
			 the plan. For purposes of this chapter, money purchase pension plan requiring
			 that all forfeitures be used to reduce current or future employer contributions
			 rather than increasing the benefits payable to the participants will be subject
			 to the provisions of this paragraph relating to pension plans rather than the
			 provisions relating to profit-sharing plans.
(3) A profit-sharing plan is a deferred
			 compensation plan, under which the contributions are based upon the profits of
			 the employer and frequently are completely discretionary with the employer.
			 Therefore, the contributions of the employer cannot be calculated based upon
			 definitely ascertainable benefits to be provided to the employees. The
			 employee, upon retirement, receives whatever amount is in his or her account on
			 that date and is not guaranteed any certain level of retirement
			 income.
(4) Under a profit-sharing
			 plan, forfeitures created by employees terminating employment who are less than
			 one hundred percent (100%) vested in their account balances are typically
			 reallocated to the other participants (including those employees whose
			 compensation falls within the administrative and management costs), rather than
			 reducing further contributions by the employer. Therefore, the actual operation
			 of such profit-sharing plans could result in a circumvention of the
			 administrative and management cost center. Therefore, an employer's
			 contributions to a profit-sharing plan will generally be considered a
			 reimbursable cost for Medicaid purposes only if all amounts credited to the
			 accounts of participants who are credited with more than three (3) years of
			 service under the plan are nonforfeitable.
(5) As with pensions plans, all contributions
			 to profit-sharing plans which are attributable to employees whose compensation
			 is includable in computing administrative and management costs will be included
			 in each such employee's compensation for the year during which the contribution
			 is made to the plan for purposes of calculating the limitations imposed upon
			 administrative and management costs under this Code. Provided, however, that in
			 the event amounts attributable to previous Medicaid reimbursements are, under
			 the "forfeiture" provisions of a profit-sharing plan, reallocated from the
			 account of an employee not coming under the administrative and management cost
			 limitations to the accounts of employees whose compensation is included in
			 computing such limitations, such amounts will be includable in the compensation
			 of the employees to whose accounts such amounts are credited for purposes of
			 computing the administrative and management costs for the year of
			 reallocation.
(6) Effective June
			 15, 1983, Medicaid will not recognize employee stock ownership plans or stock
			 bonus plans that were not both in operation and approved prior to July 1,
			 1982.
(7) Other types of qualified
			 retirement plans will be considered on a case-by-case basis by Medicaid
			 utilizing the principles contained in this section to the extent that such
			 principles are consistent with the nature of such plans.
(8) The accrual of costs by a provider under
			 any unfunded deferred compensation arrangement will not be recognized as
			 allowable costs for Medicaid reimbursement purposes.
Author:
Susan Mims
Statutory Authority:
State Plan; Title XIX,
				  Social Security Act; 42
				  C.F.R. §§
											447.200 - .272,
et seq
.