Self Insured Plan Nondiscrimination Testing

[Guest gaham]

A large employer client has a number of self insured plans that we are having to test under 1.105-11. It would appear that for purposes of determining HCEs we must first subtract the excludable employees from the total employees and then multiply by 25%. Also, for this purpose we do not exclude anyone who is participating in any self insured plan or HMO maintained by the employer even if that person is otherwise excludable. See 1.105-11(d)(3). Once we determine our HCEs we find we must use the classification test to pass because we don't pass either percentage test. To pass the classification test we look to the rules under 1.410(B)-4. To run the nondiscriminatory classification test under 1.410(B)-4© do we exclude all excludable employees set forth in 1.105-11©(2)(iii) or only those excludables who are not participating in any self insured plan maintained by the employer? I don't believe the 105 regs are clear on this point so you ought to be able to do it either way. This makes a big difference in our test results. Would appreciate any comments.