IRS Confirms Delay of Nondiscrimination Rules for Fully Insured Health Plans

Click to read full article: IRS Confirms Delay of Nondiscrimination Rules for Fully Insured Health Plans

The Affordable Care Act (ACA) requires non-grandfathered fully insured health plans to satisfy nondiscrimination rules regarding eligibility to participate in the plan and eligibility for benefits. This requirement was originally set to take effect for plan years beginning on or after Sept. 23, 2010. However, in late 2010, the IRS announced that the nondiscrimination requirement for non-grandfathered fully insured plans is delayed indefinitely, pending the issuance of regulations (or other administrative guidance) on how to comply with the requirement.

The IRS has still not issued regulations (or other administrative guidance) on the ACA’s nondiscrimination requirement for non-grandfathered fully insured plans. Because the nondiscrimination requirement has been delayed indefinitely pending the issuance of regulations, IRS officials have confirmed that the requirement will not be enforced this year.

Nondiscrimination Requirement

The ACA requires non-grandfathered fully insured plans to follow many of the same nondiscrimination rules that currently apply to self-funded plans.

Specifically, non-grandfathered fully insured plans will have to satisfy rules similar to those of Internal Revenue Code section 105(h)(2), which prohibits discrimination in favor of highly compensated individuals. This section generally provides that plans must pass two separate nondiscrimination tests—the eligibility test and the benefits test.

When the ACA’s nondiscrimination requirement for fully insured plans takes effect, certain plan designs will likely be prohibited, such as plans that only provide coverage to management or executive employees.

Also, after the effective date, employers that violate the ACA’s nondiscrimination requirement may face penalties of up to $100 per day for each affected individual.

Effective Date Delayed Indefinitely

The ACA’s nondiscrimination requirement for non-grandfathered fully insured plans was originally scheduled to take effect for plan years beginning on or after Sept. 23, 2010.

However, on Dec. 22, 2010, the IRS released Notice 2011-1, which delays the effective date until after the IRS issues regulations.

Click to read full article: IRS Confirms Delay of Nondiscrimination Rules for Fully Insured Health Plans

DOL Audits

Picture DOL AUDITS ON THE RISE The Department of Labor (DOL) has broad authority to investigate or audit an employee benefit plan’s compliance with the Employee Retirement Income Security Act (ERISA). Audits are performed by the DOL’s Employee Benefits Security Administration (EBSA). To perform these audits, EBSA employs over 400 investigators working out of field offices, […] Continue reading →