As Certified Healthcare reform specialists, we have been getting a LOT of questions about non-discrimination testing requirements under the Affordable Care Act. By the way, if you were not already aware that ObamaCare brought with it new rules for non-discrimination testing for fully-insured plans, now you are!
What kind of discrimination are prohibited?
Under Obamacare, employer-provided benefit plans cannot discriminate in favor of highly compensated employees and are prohibited from providing better eligibility, health benefits, or employer contributions to highly compensated individuals. Specific testing for employee benefits discrimination includes:
-Eligibility definitions
-Waiting period
-Benefits offered
-Contribution requirements
How does the Healthcare reform act define highly compensated employees?
As part of the new healthcare law, an employee is considered highly compensated if they are:
-One of the 5 highest paid officers in the company
-A shareholder holding more than 10% of ownership
-Among the highest paid 25% of all employees
Healthcare plans not subject to non-discrimination testing
Standalone dental and vision plans, long-term care plans, accident-only plans, and disability plans are not subject to non-discrimination testing. For any of these employee benefit plan types that you may offer, Healthcare reform has not affected you.
Failure to comply with non-discrimination rules
Under the PPACA, a fully insured plans failure to comply with the non-discrimination rules will subject the employer sponsoring such plan to an excise tax of $100.00 per day for each non-highly compensated who is being discriminated against, up to a maximum of $500,000.00.
When in doubt
If you offer a health plan and you haven’t already had a review of your eligibility, benefits and contributions policies, we urge you to contact us today.