FAQ - Nondiscrimination Testing
What are the Employee Contributions?
Section 105(h) rules suggest that employee contributions for HCIs and non-HCIs must be the same. These rules provide that a health plan that provides optional (elective) benefits to participants will satisfy the benefits test if: All participants are eligible to elect the optional benefits, and there are either no required employee contributions or the required employee contributions are the same amount.
What are the Benefit Limits?
As a permissible design option, a self-insured health plan may establish a maximum reimbursement limit for any single benefit or combination of benefits. However, any maximum limit attributable to employer contributions must be uniform for all participants (and for all dependents of employees who are participants) and may not be modified by reason of a participant’s age or years of service. If a plan covers HCIs and the type or the number of benefits subject to reimbursement under the plan are in proportion to employee compensation, the plan will fail the benefits test.
Are There Waiting Periods?
The IRS has suggested that having a longer waiting period for non-HCIs than HCIs will cause a self-insured health plan to fail the benefits test.