Same Employer, Different Benefits.

We have a H&W Benefits issues resulting from some restructuring.

Parent has two subsidiaries, A and B.  Some of the employees of A are going to be transferred to B and paid under B's EIN, however, they are going to remain participants in A's H&W benefits.  As a result, B will have a group of employees that participate in B's H&W benefits and another (new) group of employees who participate in A's H&W benefits (former A employees).  

What, if any, are the issues with this type of structure?  What should my concerns be?  Is this allowed?  Is everything okay, so long as we are able to pass some sort of testing?  

(I don't do much H&W work; I primarily deal with retirement benefits, so anything you can think of will be helpful).

Thanks a ton!

First issue is to make sure you're not inadvertently creating a potential MEWA situation.  So you'll want to confirm that A and B are in the same §414 controlled group (that should sound familiar from your retirement side work).

Second issue is to notify carriers/stop-loss, update the wrap docs, and coordinate with ACA reporting vendor.

Here's an overview of those first two issues: 

• https://www.newfront.com/blog/adding-a-new-ein-to-the-health-plan

• 2024 Newfront M&A for H&W Employee Benefits Guide

Third issue is to address the class-based structure.  There's a number of considerations there that may vary based on fully insured vs. self-insured.  You'll have to deal with the §105(h) rules if it's self-insured.

The main considerations are:

1. Clearly Communicate Class Distinctions in Plan Materials;
2. Confirm Class Distinctions with Insurance Carriers/Stop-Loss; and
3. Structure the Approach to Comply with Applicable Nondiscrimination Rules.

Here's a overview of the third issue:

• https://www.newfront.com/blog/designing-health-plans-with-different-strategies

• 2024 Compliance Considerations for Self-Insured Plans Guide

Thanks for the guidance Brian!