Can we still provide executive physicals or is that now considered discriminatory?
There are existing regulations under the Internal Revenue Code Section 105(h) nondiscrimination rules that allow benefits for “medical diagnostic procedures” to be paid to highly compensated employees without giving the same benefit to the non-highly compensated employee group. Under 26 CFR 1.105-11 (g) – SELF-INSURED MEDICAL REIMBURSEMENT PLAN., the rules allow that distinction for an employee class if the procedures are:
- Performed at a facility that only provides medical or “ancillary services”;
- For routine medical examination, blood tests, X-rays and similar tests; and
- Do not include treatment, cure, or testing of a known illness or disability, or treatment or testing for a physical injury or specific symptoms.
Most benefits experts believe that this section of the Code allows for executive physicals that feature routine medical exams, blood and other diagnostic tests, and as long as no treatment is provided, then the nondiscrimination rules will not apply. The Affordable Care Act contains provisions to extend nondiscrimination requirements to fully insured plans, but that portion of the regulation has been delayed until further notice.