Large employer 50,000 employees with self insured and insured plan

[Guest ty2433]

Roughly 65% of employees are in the self insured plan

and 35% are in the insured plan. It looks like the plan fail

the first two discrimination tests and the employer has no

real worker classification to fall back on for test 3.

For the past ten years, the employer has been paying much less of many of the non highly compensated employees health premiums

in the insured plan relative to highly compensate employees in the self insured plan.

Any problems for the employer?

Thanks,

Ty

[leevena]

If you are referring to the 105 non-discrimination testing, that testing is only done on the population in the self-funded plan, not the fully-insured. Assuming that the employer has structured the two plans correctly, there should be not be a problem. But keep in mind, I have very little of the information I need and you are asking people on a web site, so be careful.

Go to the IRS site or google 105 non discrimination and you will find many resources to help you.

[GBurns]

Which are the 2 failed tests?

Which is "test 3"?

How are the plans funded? Employee contributions through a section 125 plan?

[Guest ty2433]

self insured plan is funded 80& employer and 20% employee

the insured plan is 20% employer and 80$ emplyee

I know the employee part is pre-tax for both not sure if they

have a 125 plan

[GBurns]

I do not understand.

You stated in your OP that you see them as failing discrimination tests.

The first set of discrimination tests that they will have to satisfy are the section 125 tests, but, you do not know if they have a 125 plan. So again, I have to ask what test are you referring to in your OP?

[Guest JPHomeDesign]

If you have a decent broker he/she should be able to figure this our for you in a few hours. I was in a similar situation with 72% of my staff on a self insured plan and 28% on the insured plan. Failed the discrimination test with no solutions what to do next. Our Insurance company was worthless in sending someone out to meet with my HR Director and, a) offer solutions b) update us on AFA and compliance. We switched brokers and solved the problem. Do they have a 125 plan?