Tuesday, November 16, 2010


Firms face a stiff penalty if their insured health plans are discriminatory. You will owe a $100-a-day excise tax for each person discriminated against. In the past, only self-insured medical plans were subject to nondiscrimination rules, but the health reform law expanded the rules reach to insured group health plans.

Generally, plans must benefit 70% or more of employees, not counting workers with fewer than three years of service and those under age 25 and part-time workers. Additionally benefits for highly compensated workers,...one of the five highest paid officers, the top 25% of paid workers or owners of over 10% of the firm...must also be given to the rank and file.

The rules are effective for plan years beginning after September 22, 2010. Existing plans are protected unless they are changed significantly, such as by raising the percentage of medical bills that employees are responsible for or boosting deductibles by more than 15% plus the rate of inflation for health care.

All insured health arrangements should be checked in light of these rules, including employment and severance agreements giving execs special health benefits.