Self-Insured Medical Reimbursements for Retired Execs

[Christine Roberts]

If an employer establishes a plan to reimburse former executives and their spouses for medical expenses, is there any way around the Section 105(h) discrimination problem, other than to make the plan available to all former employees?

In my experience it is fairly common to have a private retirement plan or deferred compensation arrangement for an executive, that calls for reimbursement of medical expenses for the executive and his or her spouse, for a set period of time following retirement. Are these being established with knowledge of the discrimination problem, on the premise that the 105(h) problem is not strictly enforced, or is there some loophole that makes it permissible?