The rule was supposed to apply for plan years beginning on or after September 23, 2010. However, on December 22, 2010, the IRS and Departments of Labor and Health and Human Services announced that compliance with the new nondiscrimination provision will not be required (and thus, any sanctions for failure to comply will not apply) until after regulations or other administrative guidance has been issued. In order to provide insured group health plan sponsors time to implement any changes required as a result of any regulations or other guidance, the Departments anticipate that the future guidance will not apply until plan years beginning a specified period after issuance of the regulations.
There are no laws requiring plans to provide the same benefit coverage to all employees. Generally, employers have discretion when structuring their benefits plans and are able to make distinctions among employee populations regarding access and the level of benefits offered. The key is to make sure that benefits plan decisions are nondiscriminatory, keeping in mind the adverse impact on protected groups and any unintentional discrimination that may result from those decisions.
The Health Insurance Portability Accountability Act (HIPAA) makes it illegal to assess health insurance premiums based on health factors. It is not permissible to charge some employees more than any other similarly situated individuals based on medical conditions, claims experience, receipt of health care services, genetic information or disability. HIPAA does allow an employer to make distinctions in benefits that are offered and in the cost of benefits when those distinctions are not discriminatory.
Plans may differ among employees only on “bona fide employment-based classifications” consistent with the employer’s usual business practice:
Employee Work Classifications/Categories and Benefit Eligibility
The company has a policy of maintaining appropriate classifications of employees to make sure that all legal requirements are maintained so that there is no discrimination in terms of benefit plan eligibility and payment of compensation in accordance with federal and state laws. The purpose of this procedure is to define the company’s employee classifications for benefit plan eligibility. For questions regarding classification of employees for purposes of wage laws, please refer to “Employee Classification Procedures: Wages and Overtime Compensation.”
Human Resources will classify employees in accordance with the following procedures to ensure that all appropriate employees are offered the appropriate benefit enrollment opportunities.
Operating department managers are responsible for advising Human Resources and requesting changes in status as well as extensions in employment situations where specified periods are being exceeded.
Employee Work Classifications
Temporary (TFT)—Employed on a regularly scheduled basis of at least 40 hour per workweek for a period not to exceed 90 days. A TFT employee may be continued in this class for one additional 90-day extension period upon request of the operating manager of the department with the concurrence of Human Resources. After the 180-day period, the employee will either be converted to regular status or released.
Regular (RFT)—Employed on a regularly scheduled 40-hour basis for a nonspecified period.
Benefit Plan Participation—RFT employees are eligible to participate in all benefit plans the company offers once eligibility requirements have been met. TFT employees are eligible to participate in the company’s defined contribution plan once the employee has completed 1,000 hours of service. TFT employees will receive holiday pay prorated according to their scheduled hours for the workweek in question.
Temporary (TPT)—Employed on a regularly scheduled basis which is less than full time but equals or exceeds 20 hours per week for a period not to exceed 90 days. A TPT employee may be continued in this class for one additional 90-day extension period upon request of the operating manager of the department with the concurrence of Human Resources. After the 180-day period, the employee will either be converted to regular part-time status or released.
Regular (RPT)—Employed on a regularly scheduled basis which is less than 40 hours per workweek but equals or exceeds 20 hours per week for a nonspecified period.
Benefit Plan Participation—RPT employees are eligible to participate in all benefit plans the company offers once eligibility requirements have been met. However, all leave accrual programs and holiday pay will be provided to regular part-time employees on a pro rata basis in accordance with the employee’s regularly scheduled hours for the workweek in question. Temporary part-time employees will receive pro rata holiday pay in accordance with the employee’s regularly scheduled hours for the workweek in question.
Part-time Excluding Benefits
Temporary (TEB)—Employed on a regularly or nonregularly scheduled basis of less than 20 hours per week for a period not to exceed 90 days. Employees in this class are not eligible for any company benefit plans nor may their employment be extended.
Regular (REB)—Employed on a regularly scheduled basis of less than 20 hours per week for a nonspecified period. Employees in this class may participate in the defined contribution plan if the employee completes 1,000 hours per year. REB employees will receive pro rata holiday pay.
On-call Employee (OCE)—Employed on an “as-needed” basis for a nonspecified period. Employment in this class will be re-evaluated no less than every 180 days to determine if the employment relationship will be continued. After the first 180 days, the operating department manager must request a continuation and provide supporting documentation and receive the concurrence of Human Resources for the employment relationship to continue.
Benefit Plan Participation—OCE personnel are not eligible to participate in any company benefit plan and may not be employed for more than 400 hours in any 180-day period.
Interns (INT)—Performing work in a special status for a specified period, i.e., summer, academic semester.
Benefit Plan Participation—INT personnel are ineligible for participation in company benefit plans.
The views expressed in this response do not necessarily reflect the official policy, position, or opinions of BenefitMall. This response, to the best of our knowledge is provided for informational purposes. Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.