For health insurance and life insurance, can an employer co-pay at higher levels for the highly compensated group than for the non-highly compensated group? For example, can the employer co-pay 100% of health and life insurance premiums for vice-president and above and 50% for all other employees? What effect does this have on discrimination?

The answer to your question depends on whether the insurance is self-funded or not. If the employer provides health benefits on a fully insured basis, then they certainly can fully pay for the insurance of the vice-presidents and make the regular employees pay for all or part of the insurance.If the employer has a self-funded plan, the discrimination rules under IRC Section 105 come into play. Hope this brief synopsis is helpful.

Joe, if the employee part of the premiums are paid through a 125 plan, would this change your answer?

Thornton,
The answer remains the same. The premiums paid in full by the employer are not part of Section 125 and are not included in any discrimination testing.