Health Plan Testing

[Guest DAMorgan]

When, if ever, does a health plan need to be discrimination tested or need an accountants opinion on the 5500?

[Guest b2kates]

in general a health plan is subject to discrimination testing when it is self funded under 105(h) of the internal revenue code.

Accountants reports are necessary when the plan has more than 100 participants and has assets held for investment; i.e. in a VEBA trust.

If the plan is insured then no testing nor accountant report is required.

[Guest DAMorgan]

Thank you, what if the Plan has a mix of self-funded and fully insured benefits?

[Ron Snyder]

If assets are held for investment (whether the plan is fully or partially self-funded) the plan is subject to the audit requirement. And if the plan has any self-funded benefits, non-discrimination testing is required under IRC 105(h). The employer may choose whether or not to aggregate self-funded and fully insured plans for testing purposes. See Regs. 1.105-10 et seq.