Coverage vs Nondiscrimination

[Gilmore]

I am continually confusing coverage and nondiscrimination when it comes to cross testing.

For example, if I have a plan that benefits 4 of 5 NHCs and 100% of the HCEs, and it is being cross tested for nondiscrimination, coverage is still passed at the plan level using the ratio test at 80%, correct?

So for instance, if this plan were being submitted using form 5307 I could show my coverage passing by completing question 11 of form 5307 and include Demo 6 for the Average Benefits Test for nondiscrimination? No Demo 5 would be necessary?

As always, thanks for any input.

[Tom Poje]

Coverage is simply

"Are enough NHCEs covered compared to the number of HCEs covered"

Coverage is generally not interested in "How much" was given to people.

The only time 'How much' comes into play is if the ratio percentage fails - and then, only for the Avg Ben % test.

Nondiscrim is concerned at looking at the 'how much', and treating each 'spoiled' HCE as if they had their own little plan, and at that point you check to see if you are favoring even just one of the many HCEs.

Without looking it up, if I recall, Demo 5 is for the Avg Ben test, and if you pass ratio % it would be unnecessary.

[Gilmore]

Thanks Tom. Yes, Demo 5 is for the average benefits test, and you have unconfused me!