Key Federal agencies have decided that the new Affordable Care Act group health nondiscrimination rules are too complicated for taxpayers to apply without regulatory guidance.
Taxpayers can wait to comply with the rules until the agencies come out with regulations or some other type of guidance, officials at the Internal Revenue Service (IRS) say in IRS Notice 2011-01.
The rules are supposed to discourage employers from using health plans that offer richer benefits to high-paid individuals than to other individuals.
Section 10101(d) of the Patient Protection and Affordable Care Act (PPACA), a component of the Affordable Care Act package, created the nondiscrimination rules by adding Section 9815(a)(1) to the Internal Revenue Code and Section 715(a)(1) to the Employee Retirement Income Security Act.
“Comments raised fundamental concerns about plan sponsors’ ability to comply with [the rules] without regulatory guidance,” officials say. Those who have commented were especially confused by a subsection that suggests that taxpayers should use rules similar to the rules used to interpret Internal Revenue Code Section 105(h) when applying the new rules, officials say.
Because regulatory guidance is essential to the operation of the statutory provisions, the Departments of Labor, Treasury and Health and Human Services have decided not to require compliance with the rules until after regulations or other administrative guidance of general applicability has been issued, officials say.
Regulators are asking for comments on a variety of issues related to implementation of the rules, such as a suggestion that the nondiscrimination standards should be applied separately to employers sponsoring insured group health plans in distinct geographic locations and a suggestion that the departments should provide for “safe harbor” plan designs.
Credit for content: Dave Fear, Shepler & Fear General Agency
Purves Insurance is located in Davis, CA, and is scratching its head over laws that are so poorly crafted in the first place…