Different eligibility provisions in self-insured plans

[Guest bfw]

A client maintains a self insured medical plan subject to the 105(h) discrimination rules. They want to cover one group of employees (Group A) after 90 days, while making another group of employees (Group B)wait 1 year.

Under the Code and the Regulations, this would seem to be OK, since we are allowed to disregard all employees with less than 3 years of service in applying the 105(h) test. However, I know that there were a series of PLRs in the early 1980s which said otherwise(8432036, 8411050, 8411051, 8336065). The IRS argued in those rulings that while the plan met the eligibility test, it failed the discrimination in benefits test in any case where a HCE received benefits early (in this case, before 1 year).

My question is, does anyone know whether this is still the IRS position? Are they enforcing it on audit? Anyone seen any litigation on this issue? It seems that some plans are ignoring the issue, since different eligibility provisions are fairly common.