Miami-Dade County sits at the heart of Florida's High Velocity Hurricane Zone (HVHZ), the most stringent roofing regulatory environment in the United States. After each hurricane season, roofing contractors throughout Miami, Coral Gables, Doral, and Hialeah see a surge in permits and temporary hires. This workforce surge creates a compliance minefield for employers who maintain self-insured group health plans — a problem that often goes unaddressed until the IRS comes calling.
If your Miami roofing company offers a self-insured health benefit to some employees but not others — or provides richer benefits to ownership and management than to field crews — you may be running afoul of IRC Section 105(h). This guide explains what the rules require, how they apply specifically to the roofing industry in Miami, and what steps you need to take to stay compliant in 2026.
IRC Section 105(h) prohibits self-insured employer health plans from discriminating in favor of highly compensated individuals (HCIs). The rule has two components: an eligibility test (does the plan cover a broad enough group of non-HCIs?) and a benefits test (does the plan provide the same substantive benefits to all covered employees regardless of compensation level?).
A "highly compensated individual" under Section 105(h) is defined as one of the five highest-paid officers of the company, a shareholder who owns more than 10% of the stock, or an employee who is among the highest-paid 25% of all employees. For a typical 12-person Miami roofing company — owner, two estimators, a project manager, and eight field installers — the owner and the two estimators would likely qualify as HCIs.
Miami's roofing market is heavily hurricane-driven. Miami-Dade County requires all roofing work to comply with the High Velocity Hurricane Zone provisions of the Florida Building Code, and every permit application must reference the HVHZ Uniform Permit form. The result is a construction environment where contractor workforces fluctuate dramatically — large crews are brought in after storms, then scaled back during quieter periods.
This volatility creates two specific nondiscrimination risks. First, when companies expand rapidly after a storm, they may add temporary or seasonal workers who are excluded from health benefits entirely. If permanent office staff and management remain covered while field crews are excluded, the plan may fail the 105(h) eligibility test. Second, many Miami roofing company owners structure themselves as a separate entity or use a management fee arrangement that pays them significantly more than field workers — which concentrates HCI status in a small group and makes the benefits test harder to pass.
Florida also requires roofing contractors to hold a state license — either a Certified Roofing Contractor (CCC) or a Certified Building Contractor (CBC) — which means many company owners have significant investments in their businesses and are more likely to be classified as HCIs for plan purposes. The combination of high owner compensation, variable workforce, and self-insured plan structures makes Miami roofing companies a frequent target for 105(h) compliance failures.
Your self-insured plan must pass both of the following tests:
| Test | What It Measures | How to Pass |
|---|---|---|
| Eligibility Test | Does the plan cover enough non-HCIs? | At least 70% of all non-HCIs must be eligible, OR the plan must benefit a non-discriminatory class of employees |
| Benefits Test | Are the same benefits provided to HCIs and non-HCIs? | All benefits available to any HCI must also be available to all non-HCI participants under the same terms |
The eligibility test trips up roofing companies most often because of high turnover and long waiting periods. If your plan has a 6-month waiting period before new hires can enroll, and your field workforce turns over every 4 months, you may have a large pool of technically "excluded" employees who push you below the 70% threshold.
Under the ACA, health plan waiting periods cannot exceed 90 days. But the practical implication for Miami roofing contractors is that any worker who stays longer than 90 days must be offered coverage. If you bring in storm-response crews expecting short-term employment and they end up staying beyond that threshold, they must be offered plan enrollment.
Best practice: define a clear "full-time" threshold (typically 30 or more hours per week averaged over a measurement period) in your plan document, and apply it uniformly to all employees. Use a 60-day waiting period rather than the maximum 90-day period to reduce the risk of inadvertent exclusions. Document the measurement periods and track hours for all workers, including those brought in after storm seasons.
The most reliable way to pass the 105(h) tests is to offer a single, uniform health plan to all full-time employees under the same terms. If your Miami roofing company currently offers a self-insured plan only to management, the simplest fix is to either extend equivalent coverage to all full-time employees or switch to a fully insured group policy (which is not subject to 105(h)).
If maintaining a self-insured plan, work with an ERISA attorney to draft a written plan document that specifies eligibility rules, benefit descriptions, and contribution amounts. The IRS requires that these documents be available to all plan participants upon request. Many Miami roofing companies operate without formal plan documents — this exposes them not just to 105(h) risk but to ERISA civil penalties as well.
Consider using a Health Reimbursement Arrangement (HRA) as a nondiscrimination-friendly alternative. Individual Coverage HRAs (ICHRAs) allow employers to reimburse employees for individual health insurance premiums on a tax-free basis, and the nondiscrimination rules for ICHRAs are less burdensome than 105(h) tests for self-insured plans. This structure works particularly well for roofing companies with variable workforce compositions.
If your Miami roofing company purchases a fully insured group health policy, ACA Section 1557 prohibits discrimination in health programs on the basis of race, color, national origin, sex, age, or disability. Given Miami's diverse workforce — many roofing crews include workers from Latin America and the Caribbean — ensuring that plan enrollment materials are available in Spanish and Haitian Creole is both a legal requirement and a practical necessity for compliance.
Section 1557 does not impose the same benefits-parity test as 105(h), but it does require that plan enrollment be equally accessible to all eligible employees regardless of language proficiency or national origin. Provide translated enrollment materials and offer assistance during open enrollment periods.
Use this checklist before your next plan year begins:
| Action Item | Responsible Party | Deadline |
|---|---|---|
| Identify all HCIs (top 25% by pay + top 5 officers) | HR / Owner | 60 days before plan year |
| Count all eligible non-HCIs and confirm 70%+ are eligible | HR / TPA | 60 days before plan year |
| Review plan document for benefits parity | ERISA attorney | Annually |
| Audit waiting period against 90-day ACA maximum | HR | Annually |
| Provide Spanish-language enrollment materials | HR / Carrier | Open enrollment |
| Track hours for seasonal/storm-response workers | Payroll | Ongoing |
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