Being able to offer employees a custom health benefits package is a great way to attract and retain employees, but if the health benefits are found favoring one group of employees over the other, the health benefits will be found not in compliance with the IRS and will open the business up to severe IRS penalties and employees left to pay taxes on the pre-tax dollars they elected. To continue to provide the custom health benefits package, a test must be completed each year to determine if a plan complies. One way to ensure compliance is with Non-Discrimination Testing and BASE® can help!
Non-Discrimination Testing (NDT) is a set of tests that is required by the IRS to determine if a company’s benefits are fair for all eligible employees.
The BASE® NDT is for businesses who offer health and welfare benefits to their employees who want technical assistance to comply with all the regulations to maintain their tax-favored status.
Why does Non-Discrimination Testing matter?
NDT matters because even though it is confusing and challenging, it is NOT a choice. The IRS requires any business who offers health and welfare benefits to assess compliance on their Premium Only Plans (POP), Section 125 Cafeteria Plans, and Self-Funded Arrangements.
NDT prevents health benefit plans from discriminating in favor of employees who are considered highly compensated employees or key employees to the business.
Non-Discrimination Testing may seem like an unnecessary test, but failing to comply puts employers and their employees at risk of having to pay taxes on the benefits provided and IRS penalties.
NDT should be completed once a year, ensuring that employee benefits continue to be in compliance and that employees can continue to receive the tax-free benefits.
For more information on the BASE® Non-Discrimination Testing (NDT), contact BASE® at 888.386.9680 or visit www.BASEonline.com.