Medical Reimbursement Plans (MERPs ), such as health reimbursement 
arrangements and health reimbursement plans, are defined as self-insured group health plans. As such, MERPs are required to follow the group health plan rules of non-discrimination.
This article describes the rules of non-discrimination and how they related to MERPs.
Overview
in general, the rules of non-discrimination indicate that all employees in the same situation are treated equally and that companies must not discriminate in favor of 'highly paid persons "(IHC).
rules of non-discrimination most often come into question when companies want to offer different benefits to different types ( "groups") of employees.
For example, a company may want to offer a plan for reimbursement of health care to all full -time managers, but not to the partners. Or, a company may want to offer different repayment amounts for different types of employees, such as $ 400 / month for sales associates and $ 250 / month for administrative associates.
can companies do? Yes. However, companies must be careful (and working with a broker or trusted provider benefits) to ensure their plans pass the tests of non-discrimination.
To further understand these rules, we will examine the three main requirements of non-discrimination apply to group health plans including MERPs.
Rules non-discrimination
1. IRS non-discrimination rules
IRS rules indicate a plan shall not discriminate in favor of highly paid individuals (IHC) regarding eligibility to participate in the plan or benefits provided under the plan.
If the plan is to encourage key employees or ICH, the plan may be considered discriminatory
Tips MERPs :.
- Design groups of employees based on employment criteria bona fide and ensure that all employees of the same group are treated equally.
- not the groups consist primarily of ICH.
- explicitly specify the basis on which the discrimination test will take place in the plan document.
For a detailed discussion of ICH and repayment plans, click here.
2. ERISA non-discrimination rules
According Employee Retirement Income Security Act (ERISA), companies are generally free to set the rules of eligibility for their plans health group, as long as employees are given adequate notice of the rules and the rules do not discriminate unlawfully against certain employees.
Moreover, ERISA states distinctions between groups of participants in the same situation must be based on classifications based on bona fide employment in line with normal business practices of the company.
There is, however, one important exception. Under HIPAA a person can not be denied eligibility for the benefit or charge more for coverage because of a health factor
Tips MERPs :.
- As indicated above, the design of employee groups based on employment criteria bona fide and ensure that all employees of the same group are treated equally.
- do not eligibility based on any health factor, including disability.
3. Non-Discrimination Employment Laws
Federal law prohibits the employment of enterprises covered discrimination against benefits and other privileges employment based on race, sex, disability, national origin, genetic information, region or age.
Tips MERPs :.
- ensure that all employees in the same situation are treated the same
- not conceive employee groups based on age, race, etc. .
- Understanding the employment laws of the State, which may have additional or different requirements.
Conclusion
With medical reimbursement plans, it is common to use the employee groups to provide different benefits to different types of employees. This practice is allowed, as long as companies design groups benefit and employees to respond to non-discrimination testing.
To comply with the IRS, ERISA, and guidelines of labor law, companies should design groups of employees based on bona fide job criteria, ensuring that all employees in the same group are treated equally, and to work with a consultant company or trust benefits to ensure compliance of the plan design.
What questions do you have about MERPs and rules of non-discrimination? We would be happy to help. Leave a comment below.
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