Non-discrimination requirements and how they affect employers

About the non-discrimination rules
As more elements of the healthcare reform law come into play this year, school districts and other local government employers should understand how they're affected by the measure's non-discrimination requirements. Before 2010, the IRS only prohibited self-funded plans from discriminating in favor of highly compensated individuals (HCI). The Affordable Care Act (ACA) mandated that this rule apply to all group health plans, including fully insured plans.

Clearing up confusion

Prior to ACA, insurance plans were not allowed to discriminate on benefit levels or eligibility. But it was common to offer high-earners, such as Superintendents; lower premium contributions levels. The new ACA requirements, however, require that all employees be offered the same plan designs and premium contribution levels

A delayed mandate

The non-discrimination requirement was to be effective by September 23, 2010, but in December of 2010, the IRS delayed the implementation of the nondiscrimination rules because officials had not provided guidance including determining who falls under the label of a "highly compensated employee."

Because the IRS has not yet reached a conclusive decision on healthcare reform and nondiscrimination rules, school districts and other local public employers do not need to be concerned about the regulation at this time. Once the agency fully mandates a change, it will provide employers further guidance and time to comply with regulations.

In the meantime, many question how these rules would affect retiree health insurance premiums because these contributions often vary by employee class. National Insurance Services (NIS) has identified a solution by creating a retiree-only plan with a Health Reimbursement Arrangement (HRA). Retiree-only plans are exempt from the non-discrimination requirements.

For more detailed information on the non-discrimination rules, download our Legislative Brief: Nondiscrimination Rules for Fully-Insured Group Health Plans. NIS will continue to provide employers with timely information about the nondiscriminatory rules and other ACA mandates.