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Employer co-pay and discrimination.


Guest Thornton

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Guest Thornton

For health insurance and life insurance, can an employer co-pay at higher levels for the highly compensated group than for the non-highly compensated group? For example, can the employer co-pay 100% of health and life insurance premiums for vice-president and above and 50% for all other employees? What effect does this have on discrimination?

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The answer to your question depends on whether the insurance is self-funded or not. If the employer provides health benefits on a fully insured basis, then they certainly can fully pay for the insurance of the vice-presidents and make the regular employees pay for all or part of the insurance.If the employer has a self-funded plan, the discrimination rules under IRC Section 105 come into play. Hope this brief synopsis is helpful.

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Guest Thornton

Joe, if the employee part of the premiums are paid through a 125 plan, would this change your answer?

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