Benefits Buzz
The Internal Revenue Service (IRS) requires employers who sponsor a Cafeteria Plan (sometimes called a Section 125 Plan or Premium-only-Plan) to conduct certain non-discrimination tests. Because a Cafeteria Plan provides tax-free benefits, the IRS has rules in place so that tax-free benefits are not provided or elected more favorably to employees who are considered key employees. This is referred to as the Key Employee Concentration Non-Discrimination Test.
Cafeteria Plans, sometimes called Premium-only-Plans (POPs) or Section 125 Plans, allow employees to pay for health and welfare benefits with pre-tax contributions. Because contributions are tax-deductible, the Internal Revenue Service (IRS) has a set of rules in place to ensure highly compensated employees are not receiving or electing benefits more favorably than non-highly compensated employees. This is referred to as the Contributions and Benefits Non-Discrimination Test.
Cafeteria Plans, sometimes called Premium-only-Plans (POPs) or Section 125 Plans, allow employees to pay for health and welfare benefits with pre-tax contributions. Because contributions are tax-deductible, the Internal Revenue Service (IRS) has a set of rules in place to ensure highly compensated employees are not eligible for benefits more favorably than non-highly compensated employees. This is referred to as the Eligibility Non-Discrimination Test.
Shortly after the COVID-19 national emergency was declared in 2020, the Department of Labor (DOL) issued guidance allowing for additional time for participants to make COBRA elections and premium payments and to exercise their HIPAA special enrollment rights, among other things. Employers, administrators, and insurers are to disregard a period of time referred to as the “Outbreak Period.” The Outbreak Period will end 60 days after the COVID-19 national emergency ends.
On March 30, 3023, U.S. District Judge Reed O’Connor issued a ruling that health insurance plans are not required to cover many preventive services, nor are the plans required to cover many preventive services cost-free to members. Preventive service coverage requirements have been required as a provision of the Affordable Care Act (ACA) since 2010.
On March 17, 2023, the Internal Revenue Service (IRS) published some Frequently Asked Questions (FAQs) as it pertains to the reimbursement of nutrition, wellness, and general health expenses from a Health Flexible Spending Account (FSA), Health Savings Account (HSA), Health Reimbursement Arrangement (HRA), or Archer Medical Savings
