Does your Cafeteria or HRA Plan need non-discrimination testing? Does your self-insured health, dental or vision plan require testing? What does it mean to be a Highly Compensated or Key Employee?
In order to qualify for tax-favored status, a benefit plan must not discriminate in favor of highly compensated employees (HCEs) and key employees with respect to eligibility, contributions, or benefits. The Federal government has established regulations that specify requirements for each type of benefit plan governed by IRC Section 125 (cafeteria plans), IRC Section 105 (FSA & HRA, plans), and IRC Section 129 (dependent care plan). In order to comply, annual tests must be performed and the results documented for each benefit plan. Employers who sponsor a self-insured health, dental or vision plan are also subject to the non-discrimination rules. The results are subject to audit by the IRS.
There are a number of specific tests used to determine if certain employees are considered Highly Compensated or Key, based on the type of test required to be performed.
We can provide all testing types as well as projections to make sure you are in compliance before there are testing failures.
See our Resources page for more information regarding who is eligible to participate in certain plans, based on the company tax structure.