H&W Section 125 Nondiscrimination Testing

March 26, 2020
12:45 PM - 2:00 PM
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There are a number of nondiscrimination tests that may be used, based on the Internal Revenue Code, to ensure that benefits programs do not discriminate in favor of Highly Compensated / Key Employees. This presentation will focus on Section 125 Cafeteria Plan nondiscrimination testing basics, both under existing final regulations and the 2007 Proposed Regulations. Our speaker will also touch on when to test and the data needed, Section 129 and Section 105(h) testing, and mergers & acquisitions complications. Included will be an in-depth focus on the following areas:

  • Health & welfare plans subject to Section 125 nondiscrimination testing
  • Definitions and exclusions pertaining to Section 125 plans
  • Sanctions for plans failing Section 125 testing
  • Performing the Section 125 testing itself, including possible safe harbors
  • Pitfalls and red flags when providing benefits
  • Key testing notes and the importance of classification


Top Take Aways

  • A checklist of the tests and sub-tests that should be accounted for when performing health and welfare nondiscrimination testing – Don’t let your due diligence come up short!
  • A baseline understanding of the Section 125 nondiscrimination testing process
  • Overview of due diligence, best practices, tax implications, and the importance of classification testing


Speaker: Leonard Spangher, CEBS, Vice President & Senior Health Consultant of The Segal Group

Len is a Vice President and Senior Health Consultant in Segal’s New York office with over 20 years of experience in benefits consulting. He advises clients in health and welfare benefit design for active employees and retirees, performs competitive bidding, advises clients on matters related to legislative changes, develops contribution strategies, and conducts claims analyses and underwriting for health & welfare plans, renewals and settlement negotiations. He is an expert in health & welfare nondiscrimination testing, wellness program design, account plan (HSA/HRA/FSA) design, and determining health plan insurance reserves. His clients consist of mid-sized and large corporate and public sector organizations and governments.  Len has served in all Board of Director roles in the Northern NJ Chapter of ISCEBS, and speaks frequently at various industry events, including local ISCEBS chapters and the ISCEBS National Symposium.

Professional Development Credits available by attending this session:

Qualifies for 1.25 CEBS continuing professional education (CPE) credits     

Requested 1.25 HR (General)  recertification credit hours toward aPHR™, aPHRi™, PHR®, PHRca®, SPHR®, GPHR®, PHRi™ and SPHRi™recertification through HR Certification Institute® (HRCI®)

This program is valid for 1.25 PDCs toward SHRM-CP and SHRM-SCP recertification