Controlled group coverage testing

I have 3 companies, each company is owned 100% by the same person. Two have their own separate plans, one does not (all non key employees). Each plan will pass coverage on it's own, so I don't believe I have to test them together for ADP/ACP, but I do have to perform combed coverage testing. They will fail combined coverage when we include the company that does not have a plan.   We are going to create a plan for the one company that does not currently have a plan. Can the plans have different eligibility -  two have 60 days and one have 1 year?

Can I rely on the otherwise excludable option to carve out anyone who does not meet age 21, 1 year with semi-annual entry into their own "plan" and test them separately for coverage? 

If you aggregate for coverage, you have to aggregate for nondiscrimination as well.

For coverage, if you are testing a plan (including a plan consisting of two or more permissively aggregated plans) with multiple age and service conditions, you must use the most lenient age and service conditions to determine the coverage group.

You can use the otherwise excludable employees rule to disaggregate employees who have not met the minimum statutory age and service conditions and test them separately.

39 minutes ago, Cheryl S said:

They will fail combined coverage when we include the company that does not have a plan.  

Does your testing the plans separately take into account the employees in the company without a plan?

Kevin C - no, I did not. I was going down the road that I didn't have to test benefits rights and features if they passed coverage separately.  The client  told me yesterday the owner owns two other companies, one with a plan as part of a PEO and one without a plan, but with over 400 non key ee's. My plan/company is the only one with Key EEs so the other plan that is part of the PEO will pass coverage with the employees of the company with no current plan. My plan will not pass coverage and the combined coverage will not pass. So I guess I need to test benefits rights and features too. And aggregate nondiscrimination. 

I'm trying to find a way where they have a chance of passing coverage when the new plan is in place. They have a lot of turnover in that other company that does not current have a plan, so they want a longer service requirement for eligibility.  I'm hoping carving out the otherwise excludable may help them with coverage for 2020 and going forward. 

Just a reminder that Key employee is not the same thing as HCE. Keys matter for top heavy. HCEs matter for nondiscrimination and coverage.

How many HCEs and non-HCEs are there in each company? If the owner is the only HCE in any of the companies and he is covered, then the plan will have to cover at least 70% of the non-HCEs across all 3 companies, or less if you can satisfy the average benefit test.

C. B. Zeller - I'm told the companies I just found out about have no HCEs, my plan will have 4 HCEs for 2019. I'm waiting for a census for the other two companies. I'm guessing they will not satisfy average benefits, but we'll see. 

If you didn't consider the employees of the other controlled group members when you did your separate coverage testing, you don't know if the plans actually pass coverage testing separately because the testing wasn't done correctly.  When you get information on all of the companies, someone can help you with the ratio percentage tests.  Being in a controlled group means all the companies are treated as being the same employer, so you can't do coverage testing without having sufficient information on employees of all of the companies in the controlled group.