Section 105(h) Clause Samples
Section 105(h) governs the nondiscrimination requirements for self-insured medical reimbursement plans under the Internal Revenue Code. It sets rules to ensure that benefits provided by such plans do not favor highly compensated employees over other employees. For example, the section requires that eligibility and benefits under the plan must be offered on a nondiscriminatory basis, and failure to comply can result in adverse tax consequences for those highly compensated individuals. The core function of this clause is to promote fairness in employer-provided health benefits and prevent tax-advantaged plans from disproportionately benefiting top earners.
Section 105(h). Notwithstanding any provision of this Agreement to the contrary, to the extent necessary to satisfy Section 105(h) of the Code, the Company will be permitted to alter the manner in which medical benefits are provided to Employee following termination of Employee’s employment, provided that the after-tax cost to Employee of such benefits shall not be greater than the cost applicable to similarly situated executives of the Company who have not terminated employment.
Section 105(h). In the event that, in the determination of the Company, the Company’s provision of the COBRA Coverage as described in Section 1(a)(v) above or the COC COBRA Coverage as described in Section 2(a)(v) above could reasonably be expected to subject the Company to any tax or penalty under the Patient Protection and Affordable Care Act (as amended from time to time, the “ACA”) or could reasonably be expected to subject any highly compensated individual employed or formerly employed by the Company to adverse tax consequences under Section 105(h) of the Code, or applicable regulations or guidance issued under the ACA or Section 105(h) of the Code, the Company and the Executive will work together in good faith, consistent with the requirements for compliance with, or exemption from, Section 409A, to restructure such benefit in a manner intended to result in a benefit that is or remains exempt from Section 409A.