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Nondiscrimination Rules

Nondiscrimination rules for health benefit plans are designed to prevent coverage and higher levels of benefits that discriminate in favor of “highly compensated” employees when compared to benefits provided to other employees of the same employer.

The Affordable Care Act (ACA) requires non-grandfathered fully-insured group health plans to comply with rules addressing discrimination in benefits between these two types of employee groups. The rules are intended to be similar to rules governing self-insured group health plans under Internal Revenue Code section 105(h). However, unlike section 105(h), the rules proposed under the ACA would impose significant excise tax penalties on the plan sponsor of a discriminatory group health plan.

Enforcement of this provision is delayed until guidance from the Internal Revenue Service is issued.

Additional Information

Nondiscrimination Rules Postponed
     On December 23, 2010, IRS Notice 2011-1 was issued to respond to new public comments on the new health care reform rules related to nondiscrimination. This Briefing summarizes the Notice.