Can we give better benefits to higher wage employees & officers?

Employers will no longer be able to exclude employees or give better benefits to high wage employees based on salary  under §2716, except for Grandfathered Plans (Plans in effect prior to ObamaCare)

Prior to Health Care Reform, Federal Tax Rules prohibiting Salary Discrimination for Similary Situated Employees only applied to Self Insured Plans under 26 USC §105 h.

However, the IRS is not enforcing this rule as final regulations have not been issued. (Notice 2011-1)   Check out the underwriting – participation rules the Insurance Companies are imposing in the mean time.  We don’t know of any that will.  Click here for complementary quotes in CA.  We can search the market and find something that works for you.

Check out Long Term Care, Dental & Vision and Life Insurance where Executives can STILL have benefits the others don’t!

PROHIBITION OF DISCRIMINATION BASED ON SALARY.

§2716 (a) IN GENERAL. The plan sponsor of a group health plan (other than a self-insured plan) may not establish rules relating to the health insurance coverage eligibility (including continued eligibility) of any full-time employee under the terms of the plan that are based on the total hourly or annual salary of the employee or otherwise establish eligibility rules that have the effect of discriminating in favor of higher wage employees.

(b) LIMITATION. Subsection (a) shall not be construed to prohibit a plan sponsor from establishing contribution requirements for enrollment in the plan or coverage that provide for the payment by employees with lower hourly or annual compensation of a lower dollar or percentage contribution than the payment required of similarly situated employees with a higher hourly or annual compensation.  (Patient Protection & Affordable Care Act  SEC. 2716. Section 2716 HR 3590 Page 17)

Latest Attorney Interpretations of pending final regulations & Guidance

Please note that the “Final Rule” (2.27.2013 13416 Federal Register Vol 78)  allows an Open Enrollment Period where a Small Group can enroll without meeting participation or contribution requirements. 

What is and how do I know if my plan is Grand Fathered?

Technical Resources

National Underwriter Healthcare Reform Facts Q & A 239 et seq – Q & A 316 in 2016 Version
Explanation 2716

Discrimination Testing IRC Section   § 105 (h) IRC Section   § 105§106

Section §106 is the biggest break there is in the Tax Code, even more than Mortgage Interest.

What and when is a Final rule 33 CFR 1.05-50 –

More Pages in the Management Carve Out Section

 

 

One comment on “Salary Discrimination §2716

  1. we converted to an individual plan for the remaining employee. The plan stayed with the same insurance co. but not in our companies name.

    So, would this still be be considered “grandfathered?

    ***I doubt it. See our response in the grandfathering section.

    thanks

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