HEALTH REFORM RULES: Nondiscrimination rules an elephant in the room; Health care reform applies nondiscrimination testing to all group health plans, including fully insured plans

One of the most common questions I receive from employers is: "Can we offer different health benefits to different employees?" For the better part of the last 20 years, the answer has been: "Yes, as long as your plan is fully insured." Another important aspect of the eligibility rule is that it is applied on a "controlled group" basis. This means that employees of another company in the same controlled group must be considered in the nondiscrimination testing even if those employees are not eligible for the plan being tested. This has always been a hassle for self-funded plans and will surely be just as much of a hassle for all plans in the future. To put the penalty for noncompliance in perspective : $100 per day per non-highly compensated individual discriminated against would mean that providing a "discriminatory benefit" to even one highly compensated employee could trigger a penalty of $100 per day times 75% of the total number of employees in the employer's workforce (because the top 25% are considered highly compensated under the current rules). For an employer with 500 employees, this means a penalty of up to $37,500 per day!