Eligibility Test for Non-Discrimination

Plans can establish classifications for eligibility based on reasonable business criteria.

Reasonable Business Criteria

Reasonable business criteria is typically based on any of the following:

  • Specific job categories.
  • Compensation categories.
  • Location (less common, and depends on network).

Once these criteria are established, following numeric tests will be applied to the non-highly-compensated employees.

Numeric Tests for Regular Employees

The numeric tests for non-highly-compensated employees, or regular employees, must meet any one of these criteria. All three do not need to be met to pass.

These percentages are dependent upon the number of highly compensated employees that are covered.

  • The plan benefits at least 70% of all employees.
  • Of the eligible 70%, there are at least 80% participating, or 56% participation overall.
  • Non-Discriminatory Classification Test: The plan benefits a nondiscriminatory class of employees.

To comply with the Affordable Care Act's rules for non-discrimination, companies are subject to the following rules.

  • Companies cannot look at compensation to determine health care eligibility.
  • Companies cannot vary employee contributions based on years of service.
  • Companies cannot have different waiting periods.
  • All benefits provided to highly-compensated participants must be the same for all other participants.
  • Companies cannot approve claims for a highly-compensated employee and deny the same claim for a normal employee.

The following plans are also subject to these rules:

  • Major Medical
  • Mini-med plans
  • HRAs
  • Dental and Vision that are not standalone

The following plans are not subject to these rules:

  • Stand alone Dental and Vision
  • Long Term Care
  • Accident Plans
  • Disability Income Plans
  • HIPAA Excepted Benefits
  • Retiree only plans with no active employees
  • Short term medical plans
  • Medicare supplements
  • Employee Assistance Plans
  • Specific Disease Plans
  • Hospital Indemnity Plans

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