Let’s face it, there are some great perks to being an executive. Special VIP clubs, a company car—and even higher levels of insurance coverage! But, did you know that if your company treats classes of employees differently when designing YOUR group health plans, you may just be breaking federal and state discrimination laws? Yep, true story.
We’ve had to work with our HR partners out there to “retrain” companies to offer a very consistent group health plan, but still offer some cool perks to executives including life, disability, long term care, gym memberships, company car, etc.
HR360 recently published a good guide (see below) that walks through this subject in detail. The guide covers all of the fun rules that apply to fully insured plans, self-insured plans, Section 125 cafeteria plans, etc. A few examples of plan designs that may cause problems with nondiscrimination testing include:
- Only certain groups of employees are eligible to participate in the health plan (for example, only salaried or management employees);
- The health plan has different employment requirements for plan eligibility (for example, waiting periods and entry dates) for different employee groups;
- Plan benefits or contribution rates vary based on employment classification, years of service or amount of compensation (for example, management employees pay a lower premium or receive additional benefits); or
- The employer maintains separate health plans for different groups of employees.
The guide cautions that BEFORE implementing any plan design, employers should confirm that the arrangement will comply with any applicable rules that prohibit discrimination in favor of highly compensated employees. That’s how you rule your world right there. Better yet, call MY team of health insurance and employee benefits experts and we will counsel you through it. It’s our pleasure and just one of the MANY “perks” of knowing cool people like us!