Can A Benefit Enhancement Provide that Certain Individuals are not Eligible?

[Guest cosmo01]

We have a situation where an employer would like to increase the max coverage for organ transplans from 100K to 1 million, but wants to limit it in that employees who have had a transplant or who are on the list to receive a transplant fall under the 100K limit. This seems to violate Regulation 54.9802-1T(b)(2)(i)©. Does it? Or is this acceptable? Thoughts?

[Guest chloe]

That's discrimination based on health status and a violation of HIPAA. Its not allowed. They can provide different benefits based on a legitimate class of employee, but can't provide different benefits to individuals within the same class of employees that is based on a health status related factor.