Contribution Strategy Thoughts

[Benefits 101]

An employer has 3 job classes:

• Drivers
• General Laborers
• Administration

They want to do the following:

• Drivers with less than 1 year of employment with the company must pay for 50% of their insurance premiums. Drivers with 1 to 2 years of employment with the company must pay for 40% of their insurance premiums. Drivers with 2 to 3 years of employment with the company must pay for 30% of their insurance premiums. Drivers with 3 or more years of employment with the company must pay for 20% of their insurance premiums.
• General Laborers with less than 1 year of employment with the company must pay for 60% of their insurance premiums. General Laborers with 1 to 2 years of employment with the company must pay for 50% of their insurance premiums. General Laborers with 2 to 3 years of employment with the company must pay for430% of their insurance premiums. General Laborers with 3 or more years of employment with the company must pay for 30% of their insurance premiums.
• Admins with less than 1 year of employment with the company must pay for 40% of their insurance premiums. Admins with 1 to 2 years of employment with the company must pay for 30% of their insurance premiums. Admins with 2 to 3 years of employment with the company must pay for 20% of their insurance premiums. Admins with 3 or more years of employment with the company must pay for 10% of their insurance premiums.

Besides having to test for Section 125 discrimination... what must we consider?

[leevena]

If group is subject to ACA you will be required to limit ee cont to no more than 9.5% of income.

If self-funded, 105 discrimination testing too.

[GBurns]

See Revenue Proc. 2014-37:

http://www.irs.gov/pub/irs-drop/rp-14-37.pdf

Also be careful of ADEA and any related state laws regarding the effect on older (40+) employees:

http://assets.aarp.org/www.aarp.org_/articles/money/employers/age_discrimination.pdf

http://www.shrm.org/templatestools/hrqa/pages/offeringdifferentbenefitsfordifferentemployees.aspx

And of course be aware of the EEOC position:

http://www.eeoc.gov/eeoc/foia/letters/2001/adea_benefits.html

http://www.eeoc.gov/policy/docs/benefits.html#I.%20Introduction%20%28T7%29