Excluded Employees

[Guest KFLETT]

A restaurant client wants to add a flexible benefit feature to the premium only plan. He wishes to excluded the tipped employees who are already in the premium only plan. I think this is discriminatory, since they are already participating in the premium only portion. Now the employer wants to add the flex feature and allow only full time employees to participate.

I don't see around including the tipped employees without it being discriminatory.

Any comments?

[Guest lschaab]

It doesn't look like anyone wants to touch your question, so I'll take a stab at it. I think you would have some issues with eligibility and access, however, you could establish eligibility criteria that discourages participation, and thus abuse by the tipped employees. Generally tipped employees represent a transient population, and less likely to satisfy the waiting period (for example, 1 year), less likely to be able to 'afford' making a contribution to an account and less likely to 'value' the benefits of an FSA. Another option is only offer the Section 125 plan to FT employees, while allowing access to medical insurance using a different set of eligibility criteria. The two don't have to mirror one another, it just makes your life a little more complicated administratively.

I know from experience, that your scenario is out there in theory and practice.

[Guest KFLETT]

Thanks for your response. Do you have a code section that states that the 2 forms of eligibility are acceptable? I'm not finding specific guidance. We would allow for full time employees only in the flex feature and all employees in the premium only portion.

[Kirk Maldonado]

KFLETT:

Have you tried reading Section 125? It's always a good place to start.