Self-funded plan and limited benefits for certain diagnosis.

[Guest vicki travers]

Can a self-funded ERISA plan limit benefits to a dollar maximum for certain diagnoses such as AIDS or cancer and allow full benefits for other diagnoses?

[Kirk Maldonado]

My recollection, which is somewhat fuzzy, is that the courts have split on this point. If somebody has a more definitive answer, I'd like to know it.

[MGB]

You would probably get much better responses to your question if it were posted under "health plans" instead of under the topic of 457 plans (deferred compensation plans for governmental and nonprofit employers).

[Don Levit]

Yes, you can have different annual and lifetime limits for different diagnoses, as long as those limits apply to all employees (and former employees, if subject to COBRA). IRC Sec.105(h)(4). If a change is made, it must be done at the same time each year, and not in the middle, say, of the plan year. I do not have a code section to back up my response, only through a lot of the "research" I have done over the years. However, Treas. Reg. 1.105 - 11 ©(3) can provide some help.

Also the benefits must be available for all participants after the same waiting period. Let. Ruls.8411050, 8336065.

Don Levit,CLU,ChFC