Non-Discrimination Rules Non-discrimination rules are enforced by the IRS to prevent highly-compensated and/or key employees from using reimbursement plans as tax-shelters. These rules prohibit discrimination in favor of highly compensated employees with regard to eligibility and participation in the plan. Failure to follow nondiscrimination rules will result in the disqualification of all highly compensated employees and taxing of any funds dispersed to them. What is Non-Discrimination Testing? Non-Discrimination Testing is a series of calculations performed on demographical employee data provided by the employer. The purpose of these calculations is to determine compliance to the IRS Non-Discrimination Rules for ERISA eligibility based on ratios of highly-compensated employee benefit amounts to non-highly-compensated employee benefit amounts. A Non-Discrimination Test is evaluated on a pass/fail basis.