What does IRC 105(h) nondiscrimination require of group health plans?

What does IRC 105(h) nondiscrimination require of group health plans?

• A. Plans must provide equal benefits for all participants regardless of age.
• B. Benefits and contributions do not discriminate in favor of highly compensated individuals; eligibility and benefits must be non-discriminatory.
• C. Companies must offer identical coverage to all employees within a class.
• D. Plans must provide preferred provider network access only to executives.

Answer: (B)

IRC 105(h) nondiscrimination aims to ensure a group health plan does not favor highly compensated employees in eligibility or in the benefits and employer contributions it provides. In practice, this means the plan’s rules for who can participate and how much is contributed, as well as the benefits offered, must be non-discriminatory with respect to HC status. If executives were to receive richer coverage or larger contributions solely because of their status, that would violate the rule. The goal is fairness across employees, while allowing legitimate, non-discriminatory classifications that are not based on compensation.

IRC 105(h) nondiscrimination aims to ensure a group health plan does not favor highly compensated employees in eligibility or in the benefits and employer contributions it provides. In practice, this means the plan’s rules for who can participate and how much is contributed, as well as the benefits offered, must be non-discriminatory with respect to HC status. If executives were to receive richer coverage or larger contributions solely because of their status, that would violate the rule. The goal is fairness across employees, while allowing legitimate, non-discriminatory classifications that are not based on compensation.