What are the different types of tests we need to run?
There are two tests which both must be satisfied in order to pass the 105(h) Test. One, the Eligibility Test focuses on whether enough non-HCIs "benefit" under the health plan. The term "benefit" generally means that the employee is actually enrolled in the plan (and not merely eligible to enroll). The Eligibility Test includes: - 70 Percent Test - is satisfied if the plan benefits 70 percent or more of all employees. - 70 Percent / 80 Percent Test - the employer must first verify that 70 percent or more of all employees are "eligible" to benefit under the plan. If so, the plan must actually benefit 80 percent or more of all those eligible employees. Nondiscriminatory Classification Test - is passed if, based on certain "facts and circumstances," the plan does not discriminate in favor of HCI eligibility. Two, the Benefits Test is generally passed if the same benefits are provided to both HCIs and non-HCIs. The Benefits Test generally would be violated if an employer offered better eligibility terms for HCIs than non-HCIs (e.g., immediate eligibility versus 90-day waiting period). It also would be violated if benefits increase with years of service or compensation (e.g., if an HRA provided $100 in benefits for each year of employment).Find another question