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We have a small employer with less than 15 employees, they offer a group health plan to employees with ER paying 25% of premium and EE's paying remaining 75% of premium. ER also pays 100% of 1 Key EE's insurance outside of the Cafeteria Plan as a general business expense. When running the necessary non-discrimination tests for the Cafeteria Plan we are including both the ER Paid and the EE Paid premiums for the Health insurance. (1) Is it proper or is ER permitted to exclude the Key EE premiums paid as these were paid outside of the Cafeteria Plan as a general business expense? or does this ER paid premium amount need to be factored in for our Non-Discrimination testing? (2) If the above is not permitted, can we elect to run our Non-Discrimination testing only looking at the EE's portion of the Health Insurance premiums being paid? Thus the ER paid premiums would not be included in the Non-Discrimination testing. Problem is that with the Key EE's ER paid insurance premiums factored in the Cafeteria Plan fails the 25% concentration test. Thank you for any assistance with this question - Nathan
