Cafeteria Plan for HCE's??

[chris]

Three doc's are three of the four e/ee's of a medical practice. They are interested in a cafeteria plan. It appears to me that they would immediately run into a non-discrimination issue just based on the demographics and that a cafeteria plan would not benefit them from the tax standpoint, i.e., flunking the non-discrminiation tests causes benefits to become taxable to the HCE's. If I'm correct, it seems that the non-discrimination rules effectively prohibit small employers from utilizing cafeteria plans. Any suggestions??