An employer provides varying levels of life insurance depending upon the salary range of employees. Is this type of arrangement considered discriminatory?
Life insurance is not included in Health Care Reform, and therefore is not affected by the non-discrimination provisions of the reform; however, group life insurance offerings by employers are subject to non-discrimination testing. If an employer bases the amount of life insurance coverage on salary, the benefit level is not equal throughout the workforce. In this scenario, key employees would be in the highest bracket and receiving a higher value policy than an employee in a lower salary bracket. This type of plan is considered to be discriminatory. A tax advisor can provide guidance and specific details.
