As evidenced by this recent news story, the Obama administration is delaying enforcement of the nondiscrimination provisions of the Patient Protection and Affordable Care Act (ACA), which prohibits employers from providing better health benefits to highly compensated employees than to other employees.

While plan sponsors anxiously await regulations regarding ACA's nondiscrimination requirements with respect to non-grandfathered, fully insured health plans, they must also be mindful of compliance with regard to existing nondiscrimination rules as they apply to self-insured health plans, cafeteria plans, and flexible health and dependent care reimbursement plans.

Specifically, plan sponsors should have answers to the following questions:

- Do my current self-insured health plans satisfy the nondiscrimination requirements of Section 105(h) of the Internal Revenue Code (IRC)?
- Do my cafeteria arrangements satisfy the nondiscrimination requirements of Section 125 of the IRC?
- Do my healthcare flexible spending arrangements (FSAs) satisfy the nondiscrimination requirements of both Sections 105(h) and Section 125 of the IRC?
- Do my dependent care reimbursement accounts satisfy the nondiscrimination requirements of Section 129 of the IRC?
- Do I have documentation of compliance with the above?

If the answer to any of these questions is "I don't know" or "I'm not sure," then now is the perfect time to get your house in order. When there is a failure, the penalties under 105(h), 125, and 129 generally cause amounts that were received tax-free by highly compensated or key employees to become taxable and could result in several years of amended Federal tax returns.

How would my fully insured plans fare under the current 105(h) rules?
While the penalties under 105(h), 125, and 129 are onerous to plan participants, the penalties under ACA are staggering--plan sponsors could face an excise tax of $100 for each day the plan is not in compliance for each non-highly compensated employee who is not eligible for the health plan, up to a maximum penalty of $500,000.

While we are still guessing at what the regulations will hold, we have been told that they will be "similar" to the existing rules under 105(h).

Again, now may be a prudent time to take inventory.