Section 105 Medical Reimbursement Plans

[Guest JimD-EBR]

Entity is a C-corp. There are 4 employees – the owner, her son, her daughter, and the owner’s brother. The son and daughter are year round employees – son (age 20) is full time, daughter (age 18) part time. The brother is a seasonal employee.

If they had a flex plan, would the son and daughter be considered to have the Mom’s ownership and therefore be Key and HC employees?

If they have a medical reimbursement plan (section 105) that would benefit all year round employees Mom/son/daughter, would it be discriminatory because only HCEs receive benefits? Even though plan eligibility would include non-HCEs if they hire other employees?