This is the eleventh in a series of articles about health care reform.
In October of this year, we published an article, available here, describing the new health care reform requirement that non-grandfathered fully insured health plans must not discriminate in favor of highly compensated individuals. We mentioned that it was unclear how that new requirement would apply to insured plans, and that the penalty for noncompliance is an excise tax of $100 per day per nonhighly compensated individual against whom the discrimination occurs.
Just in time for the holidays, the IRS has released Notice 2011-1, informing employers that until guidance is issued, compliance with the new rule will not be required—and no excise tax will apply.
The IRS has again invited public comment on the new requirement, including the extent to which an employer's premium subsidy is a benefit that must be nondiscriminatory, how the rules can apply to an employer that operates in different states with different health insurance polices available, and whether there are any "safe harbor" plan designs that should be available.
In light of the new guidance, employers can wait to redesign their plans to comply with the new nondiscrimination requirement and, if they have already attempted to redesign their plans, can revert to the former design so long as that design is consistent with the insurance policy for the plan.