Can we give better benefits to higher wage employees & officers?
However, the IRS is not enforcing this rule as final regulations have not been issued. (Notice 2011-1) I googled & googled and as of 1.9.2018, still do not find ANY final regulations! Trumps Executive Order #13765 to minimize the burden of the ACA – Obamacare and #13771 to minimize regulations – one in two out, I guess mean that regulations won’t happen.
§2716 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
- Arthur Gallagher Health Reform FAQ’s Page 111
- Benefit Malls Explanation
- Aetna FAQ’s & Explanation is an excellent reference source, including information on Grand Fathered plans.
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 and when is a Rule Final??? 33 CFR 1.05-50 –
What is and how do I know if my plan is Grand Fathered?
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What are the nondiscrimination rules under Code §105(h) that will apply to our insured plans if they lose grandfathered status?
Satisfy at least one of the following nondiscriminatory participation requirements:
At least 70% of all nonexcludable (see below) employees must actually participate in the plan; or
If at least 70% of all nonexcludable employees are eligible to participate, then 80% or more of the eligible employees actually participate in the plan; or
The plan must benefit a classification of employees that the IRS has determined does not discriminate in favor of HCEs using standards that are applied under Code §410(b)
There are certain employees who can be excluded from consideration when determining if the plan passes the eligibility tests described above, if they are not eligible for coverage and:
Have not completed at least 3 years of service at the beginning of the plan year.
Have not attained age 25 at the beginning of the plan year.
Are part-time or seasonal employees.
Are covered under a collective bargaining agreement if the benefits are subject to good faith bargaining.
Are nonresident aliens who receive no income from sources within the US.
Under the subjective nondiscriminatory benefits test, the types and amounts of benefits provided to highly compensated individuals must be provided to all participants. The rule also implies that contributions must be the same for each participating employee. In addition:
Maximum benefit levels cannot vary based on age, years of service, or compensation. AJG.com *
Check our webpage on Insurance Company Participation & Contribution Requirements