I have a government client which offers all employees health insurance at retirement until they are eligible for Medicare. All employees have to have 10 years of service, with the exception of the CEO which only has a 3 year service requirement. The client subsidizes 100% of the cost for management employees and zero for all other employees.
Currently the retirees are included in the active employee plan, active employee's number 60. The active employee's group will pass the discrimination testing, all benefits and subsidies are the same for active employee's, but will not pass with the retirees being added to the testing.
If the client "carves" out the retirees and develops a separate plan for retirees only are they still subject to discrimination testing?
Thank you for your assistance.
Edie
