CER cheat sheet

Group health plan funding: fully insured (employer pays premiums, insurer bears risk), self-funded (employer pays claims, often with stop-loss insurance), and level-funded (employer pays fixed monthly amount with potential refund).

ERISA governs employer-sponsored group health plans; it imposes fiduciary duties, reporting and disclosure (Form 5500, SPD), and claims procedures, but does not mandate specific benefits.

ACA market reforms: prohibition on preexisting condition exclusions, no annual/lifetime dollar limits on essential health benefits, dependent coverage to age 26, preventive services without cost-sharing, and medical loss ratio rebates.

Employer shared responsibility (ACA §4980H): applicable large employers (50+ FTEs) must offer minimum essential coverage that is affordable (≤9.12% of household income for 2024, indexed) and provides minimum value (≥60% actuarial value) or face penalties.

COBRA: continuation coverage for 18 months (qualifying event: termination/reduction in hours), 29 months if disabled, 36 months for dependents; employer may charge up to 102% of premium.

HIPAA portability and nondiscrimination: limits preexisting condition exclusion periods (creditable coverage), prohibits discrimination based on health status, and requires special enrollment rights.

Consumer-driven health plans: HDHP paired with HSA (2024 limits: $4,150 individual/$8,300 family; catch-up $1,000 age 55+), or HRA (employer-funded, not portable).

Pharmacy benefit design: tiers (generic, preferred brand, non-preferred, specialty), formulary management, copay vs. coinsurance, and specialty drug cost-sharing limits.

Mental Health Parity and Addiction Equity Act (MHPAEA): financial requirements and treatment limitations for mental health/substance use disorder benefits must be no more restrictive than the predominant requirements applied to medical/surgical benefits.

Qualified plan requirements: IRC §401(a) - written document, exclusive benefit rule, nondiscrimination, minimum coverage, vesting, and distribution rules.

Vesting schedules: cliff (100% after 3 years) or graded (2-6 years) for employer contributions; employee deferrals always 100% vested.

ADP/ACP nondiscrimination testing: compares highly compensated employees (HCEs) to non-HCEs; safe harbor 401(k) (3% nonelective or 4% match) exempts from ADP/ACP testing.

Top-heavy rules: if account balances for key employees exceed 60% of total plan assets, minimum contribution (3% of compensation) or minimum benefit (2% per year of service) required.

Contribution limits (2024): 402(g) elective deferral $23,000; catch-up $7,500 (age 50+); 415(c) annual additions $69,000; compensation limit $345,000.

Required minimum distributions (RMDs): begin at age 73 (SECURE 2.0) for those born 1951-1959; age 75 for those born 1960 or later; penalty for failure 25% (reduced to 10% if corrected timely).

Plan administration: SPD (summary plan description) within 120 days of plan adoption, annual Form 5500 filing (large plans), and fiduciary responsibilities under ERISA.

Loans and hardship withdrawals: loans limited to 50% of vested balance or $50,000 (whichever less); hardship must be for immediate and heavy financial need per safe harbor rules.

Defined benefit funding: actuarial cost methods (unit credit, entry age normal, aggregate) determine minimum required contribution under IRC §430; quarterly contributions required if underfunded.

Pension Benefit Guaranty Corporation (PBGC) premiums: flat-rate per participant plus variable-rate based on unfunded vested benefits; maximum guaranteed benefit limits (2024: $7,107.95/month at age 65).

Funding target attainment percentage (FTAP): plan's funded percentage; affects benefit restrictions (e.g., lump sums prohibited if <60%, accruals frozen if <80%).

Investment policy statement (IPS): outlines plan objectives, risk tolerance, asset allocation, and monitoring procedures; ERISA §404(c) provides fiduciary relief if participants exercise control and receive adequate disclosures.

Default investment alternatives: qualified default investment alternatives (QDIAs) such as target-date funds, balanced funds, or managed accounts receive fiduciary protection.

Plan asset rules: contributions must be deposited timely (small plans: 7 business days for participant contributions; large plans: 3 business days for amounts withheld from pay).

Funding vehicles: trust (most common), annuity contracts, or custodial accounts; assets must be held for exclusive benefit of participants.

Surplus/overfunding: assets exceeding liabilities may be subject to excise tax or used to reduce future contributions; reversion to employer subject to 20% excise tax (50% if not qualified).

Nonqualified deferred compensation (NQDC): governed by IRC §409A; requires written plan, election timing, and distribution triggers; violation triggers immediate taxation plus 20% penalty and interest.

Executive compensation limits: IRC §162(m) caps deductible compensation at $1 million for covered employees (CEO, CFO, and next three highest paid); performance-based exception repealed by TCJA.

Equity compensation: incentive stock options (ISOs) - $100,000 annual vesting limit, favorable tax treatment; nonqualified stock options (NSOs) - ordinary income at exercise; restricted stock and RSUs taxed at vesting.

Fringe benefits: taxable unless specifically excluded; common exclusions include group-term life insurance up to $50,000, health insurance, de minimis fringes, and qualified transportation benefits (up to statutory limits).

Golden parachute rules: IRC §280G limits deductible payments and imposes 20% excise tax on excess parachute payments (3 times base amount) for corporations undergoing change in control.

Cafeteria plans (IRC §125): allow employees to choose between cash and qualified benefits; must satisfy nondiscrimination and exclusive benefit rules; flexible spending accounts (FSAs) with use-or-forfeit rules and carryover up to $610 (2024).

Stock appreciation rights (SARs) and phantom stock: cash-settled awards taxed as ordinary income upon exercise; often used by non-public companies.

Health reimbursement arrangements (HRAs): employer-funded, tax-free reimbursements for medical expenses; integrated with group health plan or used as individual coverage HRA (ICHRA) with affordability requirements.