Benefits, rights and features testing

[Barbara]

 

A plan has a tiered match formula. Each participant is eligible for one of the tiers (30%, 40%, 50%, or 75%). We understand we have to do a Benefits, Rights, and Features coverage test on each tier of match. Our understanding is that anyone who is benefiting at the same or greater level of match as the tier being tested, is deemed to be benefiting in that tier (i.e. if you get a 50% match, you’re considered benefiting in the tests for the 30%, 40%, and 50% tiers).

 

In this plan, only the 30% tier passes. As would be expected, the 75% tier fails the worst. We are going to bump up an additional 17 participants from their current level of match to 75% to pass coverage.

 

We believe that these 17 participants, who are now benefiting at the 75% level, should be considered as benefiting in all the lower tiers, which would make those tiers pass as well. However, the provider doing their BRF testing believes that different participants must be used to make each tier pass; i.e. even if someone was bumped up from 30% to 75%, you would still not consider them benefiting in the 40% and 50% tiers.

 

What do you think? Can you find anything in the regs (or elsewhere) that addresses this situation?

[Larry Starr]

1 hour ago, Barbara said:

 

A plan has a tiered match formula. Each participant is eligible for one of the tiers (30%, 40%, 50%, or 75%). We understand we have to do a Benefits, Rights, and Features coverage test on each tier of match. Our understanding is that anyone who is benefiting at the same or greater level of match as the tier being tested, is deemed to be benefiting in that tier (i.e. if you get a 50% match, you’re considered benefiting in the tests for the 30%, 40%, and 50% tiers).

 

In this plan, only the 30% tier passes. As would be expected, the 75% tier fails the worst. We are going to bump up an additional 17 participants from their current level of match to 75% to pass coverage.

 

We believe that these 17 participants, who are now benefiting at the 75% level, should be considered as benefiting in all the lower tiers, which would make those tiers pass as well. However, the provider doing their BRF testing believes that different participants must be used to make each tier pass; i.e. even if someone was bumped up from 30% to 75%, you would still not consider them benefiting in the 40% and 50% tiers.

 

What do you think? Can you find anything in the regs (or elsewhere) that addresses this situation?

Barbara, this is an answer without doing any research, but I can't see how their determination makes any sense.  In regular rate group testing, if you need one additional person in the two highest rate groups to  pass and  you increase one participant who jumps two rate groups so he qualified in both, that's how you pass.  Ask the provider to provide backup for their opinion.  I don't there is any, but if I'm wrong (again, I did not do the research), I'd love to see their explanation.

[John Feldt ERPA CPC QPA]

Have them re-read Treasury Regulation section 1.401(a)(4)-4(d)(4)?

(4)Permissive aggregation of certain benefits, rights, or features- 

(i)General rule. An optional form of benefit,  ancillary benefit, or  other right or feature may be aggregated with another  optional form of benefit,  ancillary benefit, or  other right or feature, respectively, and the two may be treated as a single optional form of benefit,  ancillary benefit, or  other right or feature, if both of the following  requirementsare satisfied: 

(A) One of the two optional forms of benefit,  ancillary benefit, or other rights or features must in all cases be of inherently equal or greater  value than the other. For this  purpose, one  benefit, right, or feature is of inherently equal or greater  value than another  benefit, right, or feature only if, at any time and under any  conditions, it is impossible for any  employee to receive a smaller  amount or a less valuable right under the first benefit, right, or feature than under the second  benefit, right, or feature. 

(B) The optional form of benefit, ancillary benefit, or  other right or feature of inherently equal or greater  value must separately satisfy paragraphs  (b) and  (c) of this section (without regard to this paragraph (d)(4)).

(ii)Aggregation may be applied more than once. The aggregationrule in this paragraph (d)(4) may be applied more than once.

[John Feldt ERPA CPC QPA]

Larry is not wrong. 

[Barbara]

Thanks to both John and Larry! This helps a lot.....