Q: It seems like there should be some type of regulation to prevent discrimination when extending benefits to some full-time employees and not others. Are there any guidelines to legitimately classing out full-time employees from being eligible for benefits?
A: In general, small employers with fully insured group health plans can offer benefits to certain classes of employees (and not others) based on reasonable, bona fide business classifications.They are not obligated to offer benefits to a particular class of employee (note that insurance carriers may have their own requirements as to who must be offered benefits).
The rules to be concerned with are the section 125 cafeteria plan nondiscrimination rules.These rules will preclude the employer from taking pre-tax premium contributions from highly compensated employees if the employer’s eligibility or contribution strategy disproportionately favors highly compensated employees.They should work with their payroll company to have the nondiscrimination tests run, which will help them determine whether their particular eligibility and contribution strategy is permissible.
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Posted on Thu, February 11, 2016
by Matt Avery filed under