Separate plans for HCE and NHCE

[artvandelay3]

Quick little background. I have a Dr. client who wants to have a seperate plan for HCE's and NHCE's. The reason behind this is he wants to offer an investment to the HCE's that is not avaliable to NHCE's. Is this possible? If so, could someone point me in the right directions regarding rules and regulations and how to set it up.

[ETA Consulting LLC]

Benefits, Rights & Features must be currently and effectively available on a non-discriminatory basis.

Good Luck!

[david rigby]

Will the HCE plan pass the coverage requirements on its own? If not, then it must be combined with the other plan(s). In that case, all other discrimination testing (ie, as mentioned in Post 2 above) must be done on a combined basis.

[artvandelay3]

Both plans will be a Safe Harbor so all eligible employees will be particpants.

[My 2 cents]

Wasn't preventing just such a provision (investment, presumably desirable, available only to HCEs) one of the principal ideas behind the non-discrimination rules? Why should they be able to do it?

As David Rigby pointed out, if the HCE-only plan is able to pass coverage without regard to the non-HCE coverage, then it would appear to be OK. Otherwise, you would have to aggregate the two plans to pass coverage, and the presence of a favorable provision related to benefits, rights and features in the HCE but not the non-HCE plan would bar aggregation and the arrangement would fail.

Note that having a single plan and offering an investment option with a $10,000 minimum investment would probably also be a problem, based on effective availability.

[Tom Poje]

in other words

Looking at the HCE only plan.

how many NHCEs benefit?

none, zippo, zilch because they are excluded from the plan. but assuming they have worked 1 year of svc they are included and not benefiting for testing.