Is it possible to avoid discrimination testing by offering a cafeteria plan?
An eligible small employer is provided with a safe harbor from cafeteria plan non-discrimination requirements for specified, qualified benefits offered under the plan, if the cafeteria plan satisfies minimum eligibility and participation requirements and minimum contribution requirements. To take advantage of the safe harbor, these requirements must be written into the cafeteria plan documentation (i.e., Plan Document and Summary Plan Description). If a fully insured health plan has grandfathered status, that plan would be exempt from the new non-discrimination requirements under Section 105(h) as outlined in the new Health Care Reform laws. If the plan is not grandfathered and not part of a simple cafeteria plan, it would be subject to the non-discrimination requirements. Recent IRS guidance has delayed the effective date for fully insured plans to comply with the new nondiscrimination requirements.
