Non-Discrimination 105(h) Rules

Provisions to be effective following future regulatory guidance

Summary

Insured group health plans may not discriminate in favor of highly compensated employees under the Internal Revenue Code Section 105(h). This provision previously applied to self funded plans only but will apply to fully insured non-grandfathered plans as well, following future issuance of specific guidance on the rules' application to insured plans.

Based on public comments in response to the earlier notice, Notice 2011-1 was issued on December 22, 2010, which announced that insured plans are not required to comply with the rules until further guidance is provided. Until that time, sanctions for failure to comply with the rules will not apply. Furthermore, the agencies expect that when such guidance is issued, its effective date will be delayed until plan years beginning a certain time after its issuance. Public comments were also requested on 13 specific issues.

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