January 7,
2011
IRS Delays
Effective Date for Insured Group Health Plan Compliance With
Nondiscrimination Rules Under the Affordable Care Act
The Internal Revenue Service ("IRS") recently issued Notice
2011-1, delaying the application of Internal Revenue Code
("Code") nondiscrimination rules to non-grandfathered,
insured group health plans. (For additional information
regarding grandfathered plans, click here.)
Code Section
105(h) currently prohibits self-funded group health plans from
discriminating in favor of highly compensated individuals as to
either plan eligibility or plan benefits. As amended by the
Patient Protection and Affordable Care Act (the "Affordable Care
Act"), this prohibition will apply to insured health plans as
well.
Based on
comments concerning Code Section 105(h) applicability to insured
plans, the IRS has now determined that further regulatory guidance is
essential to the implementation of this provision. Therefore,
Notice 2011-1 advises that the IRS and the Departments of Treasury,
Labor and Health and Human Services will not require insured group
health plans to comply with the Section 105(h) nondiscrimination
rules until further guidance has been issued.
The
Departments do not anticipate that further guidance will be effective
until plan years beginning a specified period after the date on which
the guidance is issued. For calendar year plans, this means
that the earliest effective date would be January 1, 2012.
The Notice
also asks for additional comments on specific issues that should be
addressed in future guidance under this provision. Comments
must be submitted by March 11, 2011.
A copy of the
Notice is available here.
If you have
questions please contact:
Edward
C. Hammond at (248) 988-1821 - ehammond@clarkhill.com, John
P. Schneider at (616) 608-1108 - jschneider@clarkhill.com,
Kristi
R. Gauthier at (248) 988-5854 - kgauthier@clarkhill.com or
Ellen Hoeppner at (313) 965-8262 - ehoeppner@clarkhill.com.
