As we discussed in our last post, the election is officially behind us and now we begin to look to the future.  Unfortunately, we are back in the position of having more questions than answers.  Over the last couple of months we have received several questions regarding the future of the status of discriminatory benefits for highly compensated individuals (HCIs).  Remember health care reform included provisions to affect nondiscrimination rules for fully-insured group health plans, however, implementation and enforcement of these provisions were delayed  until regulations or other guidance is issued by the Internal Revenue Service (the “IRS”) (IRS Notice 2011-1.)  As a reminder, prior to the ACA, IRS regulations prohibited only self-funded plans from discriminating in favor of highly compensated HCIs with regard to health benefits.  Historically, employers with fully-insured health plans offered more generous benefits to executive employees as part of their total compensation and benefits package. These benefits have included shorter waiting periods and lower employee additional contributions for a select group of managers.  More commonly, employers would offer a separate plan for executives and managers.  While this has not been enforced, we have been advising clients to be planning for a future where such benefits are no longer permissible.

After six years, we still have not seen any regulations that will trigger enforcement and to be honest we no longer expect any. While President-elect Trump has stated that repealing and replacing the ACA will be a top priority, we do not see anything happening with this portion of the law anytime soon.  It is likely that the repeal of the non-discrimination rules would require legislation and that would require 60 votes in the Senate which means both parties would have to agree.  At present we anticipate that the new administration will not act on enforcement of the provisions while they work on its repeal.

 

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