Generally, nondiscrimination rules require employers to offer an employer-sponsored group health plan on the same basis to all employees in a particular classification group. This applies to all facets of the group health plan coverage: Section 125 premiums, cafeteria plan options (HSA, FSA, etc.), and HRAs.
Differences in coverage cannot be determined by any health-related criteria, nor may it be decided by race, age, or gender. Only nondiscriminatory employee classification groups may be applied.
Here are the most common employee classification groups defined by HIPAA, ERISA, and DOL nondiscrimination rulings:
More detailed information on employee classification groups is available from these government resources:
Legal Guidance for Group Health Plan Requirements
US Code on Cafeteria (§ 125) and HRA (§ 105) plans:
26 U.S. Code § 105 – Amounts received under accident and health plans
26 U.S. Code § 125 – Cafeteria plans
Read more about nondiscrimination testing in these Core Documents blog posts:
HSA nondiscrimination testing vs. comparability rule depends on employer contribution method
How to identify key employees and HCEs to conduct non-discrimination testing
This article is intended only as an informational piece and is not intended as tax or legal advice. Core Documents, Inc., and its partners do not provide tax, legal, or accounting advice. You should consult your own tax, legal and accounting advisors and/or the IRS, for the best information applicable to your unique situation.
Core Documents is the country’s leading provider of cost-effective, tax-saving benefit plan documents for Section 125 Cafeteria plans and Health Reimbursement Arrangements. The Trusted Source since 1997, thousands of satisfied agents and employer groups nationwide rely upon Core Documents for free plan design consulting services, plan document updates, ERISA Wrap SPDs, and administration services.
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