Nondiscrimination in eligibility and benefits

Under the Patient Protection and Affordable Care Act, all non-grandfathered, fully insured group plans must comply with nondiscrimination rules and requirements that previously only applied to self-funded plans. A fully insured plan may be considered discriminatory if it has:

  • Different waiting periods for different classes of employees
  • Different contribution amounts for different classes of employees
  • Different carve-outs and benefit options for management that are not available for other employees

Initially, the provision was to be effective for plan years beginning on or after September 23, 2010. However, on December 22, 2010, the Internal Revenue Service and Departments of Treasury, Labor, and Health and Human Services announced that enforcement would be delayed to give plans more time to comply with the nondiscrimination rules. This delay only applies to fully insured group plans.

What this means for your clients

As a trusted advisor, be sure to help your small or large group clients with non-grandfathered plans understand the impact of the delay. They now have an opportunity to review the plan design or eligibility changes that may be needed to comply with the future nondiscrimination rules. And until the final rules are issued, they can continue to offer plans with management carve-outs and different benefit structures for different employees.

Keep in mind that groups, not insurers, are responsible for meeting the final rules and requirements and for paying any penalties if those requirements aren’t met. Your clients may need to seek professional advice to determine how the law will apply to them. For more information, contact your Kaiser Permanente account representative.

For more information