Benefits Test for Non-Discrimination
To ensure that benefits under a plan do not favor highly-compensated employees, companies can test the plan design and plan operation.
Testing Plan Design for Non-Discrimination
To test the plan design for compliance under the Affordable Care Act's non-discrimination rules, determine whether or not the following items are true.
- Employee contributions must be identical for each benefit level.
- If the plan establishes a maximum reimbursement for any single benefit or combination of benefits, that level cannot vary based on compensation, age, or years of service.
- All benefits available to highly-compensated employees must also be offered to all other participants.
- Plan(s) cannot impose different waiting periods for employees.
Testing Plan Operation for Non-Discrimination
Testing plan operation for non-discrimination is uncommon on a company-level, as discrimination at an operational level is usually on the insurance carrier end. An example of this would be if a claim were approved for a highly-compensated employee but were denied for a regular employee.
However, if an employer offers an HRA, they are required to approve claims the same way for regular employees as they would highly-compensated employees.
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