Discrimination Issues

[Guest slrogers]

Can someone point me in the direction to find information on non-discrimination requirements for Health plans? I handle compliance for my employer's Profit Sharing and 401(k) Plans but know little about the requirements for Health plan.

I am specifically looking for information on the ability to exclude certain groups of employees from coverage or the ability to charge different premiums to different groups.

[SLuskin]

If there is no Section 125 Premium Only Plan allowing the participants to pay their portion of the health insurance premium on a pretax basis, you can offer health insurance in a discriminatory fashion. Once you have any kind of Cafeteria Plan, however, you are governed by all of the Section 125 discrimination rules.

[RTK]

Don't overlook IRC 105(h) nondiscrimination requirements if a self-insured health plan. Also HIPAA nondiscrimination based on health related factors can be an issue.

[mroberts]

Yes and no on the response about being able to offer health insurance on a discriminatory basis. Your health insurance carrier is going to require you to set a rule for eligibility that must be adhered to. And most carriers will not accept a definition that's discriminatory. Now, if you are self-insured, that's a different story. However, if you're asking this question, I would tend to make an assumption that you don't have hundreds of employees.

[Guest slrogers]

Thank you all for your responses.

We do have a Section 125 plan that allows our employees to pay premiums on a pre-tax basis and we are self-insured. As for the comment about not having hundres of employees, we actually have over 2000 employees. However, we hire a lot of project type workers who are not used to receiving benefits and offering benefits to those groups of employees would make us very uncompetitive when bidding for jobs. We are looking for a way to either not offer insurance at all to specific classes of employees or charge them a higher premium for the insurance.

We have gotten conflicting information from our insurance broker and our attorney so I'm trying to do some research myself.

I will review the Section 125 non-discrimination rules as well as the rules in 105(h).

Thanks again.