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Why do we need to do 105(h) testing?

Code section 105(h) contains the rules applicable to self-insured plans. It does not prohibit all types of discrimination. It prohibits self-insured group health plans from discriminating in favor of "highly compensated individuals" (HCIs) and against non-HCIs as to Eligibility to participate and as to Benefits available under the plan. *PPACA rules now include testing for insured medical plans under 105h as well. The two nondiscrimination tests under 105(h) are: - The Eligibility Test, which is intended to ensure that "enough" non-HCIs benefit from the plan. Plan can pass if one of the following is met: Benefits 70% of all employees; Benefits 80% of employees eligible to participate if at least 70% of employees are eligible, or Benefits a nondiscriminatory classification of employees. - The Benefits Test, is intended to ensure that all participants are eligible for the same benefits and that HCIs are not receiving better benefits. Same benefits options should be available to all eligible employees and no disparate waiting periods.

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