BASE^® Blog

When health benefits are delivered on a pre-tax basis, there could potentially be discrimination in favor of employees who earn more and because they could potentially reduce the taxes employers have to pay on benefits. The IRS mandates annual testing to prevent this kind of discrimination, otherwise known as Non-Discrimination Testing (NDT).

What do businesses need to know about NDT?

What is it?

Non-Discrimination Testing evaluates the fairness of the health benefits, such as an HRA and/or the 125 Cafeteria Plan, to ensure they are accessible to all eligible employees, not just the highly compensated employees on a yearly basis. 

The BASE® Non-Discrimination Testing takes out the guesswork as the employer determines if there is discrimination between employees at the company and offers assistance to comply with all regulations to maintain the tax-favored status. 

What plans does NDT apply to?

Health Reimbursement Arrangements and 125 Cafeteria Plans. 

When should an employer test?

NDT should be performed by the last day of the current plan year and include all the employees who were employed on any day during the plan year.  But it is also recommended that the employer tests in the middle of the plan year in case there are any additional steps that should be taken to ensure the employer passes the test by the end of the plan year. 

What if the business doesn’t pass NDT?

The employer-sponsored health benefit plans may fail if one or more non-discrimination tests favor highly compensated employees/key employees and other employees at the company.  Such as, lower contributions, availability of more benefits, higher level of benefit reimbursement, and more.  BASE® will provide the employer with the information on the reason and have recommendations to bring your plans into a passing status. 

NDT is not a choice, and it can be confusing and challenge.  BASE® can provide employers with the assistance to comply with Non-Discrimination Testing rules and regulations, contact BASE® at 888.386.9680 or visit www.BASEonline.com to learn more.

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FSAs are one of the most popular employer-sponsored benefits.  But no matter how popular it is, not every participant knows all the eligible health care products and services they can pay for with their pre-tax funds! 

The Flexible Spending Account (FSA) is a pre-tax benefit designed to provide employees with tax advantages to help offset their health care costs. 

The BASE® FSA provides employees with more options to pay for out-of-pocket health care spending not covered under any insurance plan. 

Many know that employees can pay for common health care expenses such as copays, prescriptions, medical supplies, and more, but here are 8 surprising things you may not be aware of that people can buy with FSA dollars:

1. Over-the-counter medications and menstrual products
2. Birth control
3. Breast pump and supplies
4. Sunscreen
5. Transportation to cover the cost of local and long-distance transportation that is essential for care
6. Home modifications for health care-related improvements
7. Weight-loss programs but not gym fees or food
8. Alcohol or drug treatment

 And so much more!

Flexible Spending Accounts are a valuable tool that offers participants the opportunity to put money away on a pre-tax basis to pay for eligible health care expenses, planned or unplanned.  From routine health care needs to unexpected costs, the FSA provides a safety net to help pay for those costs while not dipping into a personal or savings account.  

To learn more about the BASE® Flexible Spending Account, contact BASE® at 888.386.9680 or visit www.BASEonline.com.

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