All group benefit plans, in one form or another, are subject to various non-discrimination rules. Commonly, employers who offer different benefits (or charge different premiums) by employee class are required, by several laws, to analyze these arrangements annually to determine whether such plan designs are permissible.
Common plan designs, sometimes referred to as “carve-outs” or “classing out,” include:
- excluding certain classes of employees from group benefits;
- offering different benefits or contributions to different classes of employees (e.g., managerial vs. non-managerial)
Additionally, in order to qualify for tax-favored status, Cafeteria plans, Flexible Spending and Health Reimbursement Arrangements (FSAs and/or HRAs) must not discriminate in favor of highly compensated employees (HCEs) and key employees with respect to eligibility, contributions, or benefits.
In order to prove compliance with these requirements, annual tests must be performed and the results documented for each benefit plan and the results are subject to audit by the IRS.
ComplianceBug can perform the required testing to ensure they are conducted correctly, with fast and accurate results.
