We needed a scalable solution to maintain our continued excellence in the area of benefits compliance. After researching various available tools and evaluating whether to build an automated solution ourselves, NDX became the choice for meeting our needs. Integrating NDX into our compliance testing process has allowed us to scale a very time intensive process, without hiring and training additional staff-providing us more flexibility. - Jody Dietel, Chief Compliance Officer, WageWorks
Employee benefit plans that offer eligible employees the ability to choose from a menu of various types of benefits. Benefit options may include health and accident insurance, health and dependent care flexible spending arrangements (FSAs), HSA contributions, and cash (among others). If plan is discriminatory, highly paid/key employees may have adverse tax consequences.
Nondiscrimination Test | Description |
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25% Key Employee Concentration Test | Total benefits provided to key employees must not exceed 25% of the total benefits provided to all employees under the plan |
Eligibility Test | Ensures that employer has made enough employees eligible to enroll in the plan |
Safe Harbor Percentage Test | Compares the percentages of non-highly compensated and highly compensated individuals benefitting under the plan |
Contributions and Benefits Test | Benefits and employer contributions should be the same for all employees |
Availability Test | The same benefits or employer contributions must be made available to similarly situated highly compensated and non-highly compensated employees |
Utilization Test | The qualified benefits elected by highly compensated participants (measured as a percentage of their aggregate compensation) can't exceed the qualified benefits elected by non-highly compensated participants (measured as a percentage of their aggregate compensation) |
Health FSA/HRA. Allows employees to obtain reimbursement for medical expenses that are not insured (e.g. copayments, deductibles, etc.). Health FSAs are typically funded by employees; HRAs are employer-funded.Self-Insured Medical Plan.A plan that does not use insurance to pay health benefits.
Nondiscrimination Test | Description |
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Eligibility Test | A plan must not discriminate in favor of highly compensated employees as to eligibility to participate |
70% Test | At least 70% of all eligible employees participate in the plan |
70% / 80% Test | At least 70% of employees are eligible to participate in the plan, and at least 80% of eligible employees elect coverage |
Nondiscriminatory Classification Test | Compares the percentages of non-highly compensated and highly compensated individuals benefitting under the plan |
Benefits Test | Generally speaking, highly and non-highly compensated participants must be afforded the same benefits. Plan must be nondiscriminatory in both design and operation |
Employer sponsored program that provides reimbursements (up to $5,000 annually) to employees who pay for dependent care.Allows employees to pay dependent care expenses on a pre-tax basis.
Nondiscrimination Test | Description |
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More-Than-5% Owners Concentration Test | Employees who own 5% or more of the business (or their family members) can't receive more than 25% of dependent care benefits |
55% Average Benefits Test | The non-highly compensated employee average benefit must be at least 55% of the highly compensated employee average benefit |
Eligibility Test | Ensures that a reasonable percentage of non-highly compensated employee s are eligible to participate |
Nondiscriminatory Classification Test | Compares the percentages of non-highly compensated and highly compensated individuals benefitting under the plan |
Contributions and Benefits Test | Ensures that contributions and benefits under the plan do not favor highly compensated employees |