Exception to the HIPAA Nondiscrimination Requirements for Certain Grandfathered Church Plans, 75055-75057 [06-9558]
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Federal Register / Vol. 71, No. 239 / Wednesday, December 13, 2006 / Rules and Regulations
elected under § 146.180 of this part to exempt
the plan from the requirements of this section
for the plan year beginning October 1, 2005,
and renewed the exemption election for the
plan year beginning October 1, 2006. Under
the terms of the plan while the exemption
was in effect, employees and their
dependents were allowed to enroll when the
employee was first hired without regard to
any health factor. If an individual declines to
enroll when first eligible, the individual
could enroll effective October 1 of any plan
year if the individual could pass a physical
examination. The evidence-of-good-health
requirement for late enrollees, absent an
exemption election under § 146.180 of this
part, would have been in violation of this
section. D chose not to enroll for coverage
when first hired. In February of 2006, D was
treated for skin cancer but did not apply for
coverage under the plan for the plan year
beginning October 1, 2006, because D
assumed D could not meet the evidence-ofgood-health requirement. With the plan year
beginning October 1, 2007 the plan sponsor
chose not to renew its exemption election
and brought the plan into compliance with
this section. The plan notifies individual D
(and all other employees) that it will be
coming into compliance with the
requirements of this section. The notice
specifies that the effective date of compliance
will be October 1, 2007, explains the
applicable enrollment restrictions that will
apply under the plan, states that individuals
will have at least 30 days to enroll, and
explains that coverage for those who choose
to enroll will be effective as of October 1,
2007. Individual D timely requests
enrollment in the plan, and coverage
commences under the plan on October 1,
2007.
(ii) Conclusion. In this Example 1, the plan
complies with this paragraph (i)(2).
Example 2. (i) Facts. Individual E was
hired by a nonfederal governmental employer
in February 1999. The employer maintains a
self-funded group health plan with a plan
year beginning on September 1. The plan
sponsor elected under § 146.180 of this part
to exempt the plan from the requirements of
this section and ‘‘§ 146.111 (limitations on
preexisting condition exclusion periods) for
the plan year beginning September 1, 2002,
and renews the exemption election for the
plan years beginning September 1, 2003,
September 1, 2004, September 1, 2005, and
September 1, 2006. Under the terms of the
plan while the exemption was in effect,
employees and their dependents were
allowed to enroll when the employee was
first hired without regard to any health
factor. If an individual declined to enroll
when first eligible, the individual could
enroll effective September 1 of any plan year
if the individual could pass a physical
examination. Also under the terms of the
plan, all enrollees were subject to a 12-month
preexisting condition exclusion period,
regardless of whether they had creditable
coverage. E chose not to enroll for coverage
when first hired. In June of 2006, E is
diagnosed as having multiple sclerosis (MS).
With the plan year beginning September 1,
2007, the plan sponsor chooses to bring the
plan into compliance with this section, but
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20:15 Dec 12, 2006
Jkt 211001
renews its exemption election with regard to
limitations on preexisting condition
exclusion periods. The plan notifies E of her
opportunity to enroll, without a physical
examination, effective September 1, 2007.
The plan gives E 30 days to enroll. E is
subject to a 12-month preexisting condition
exclusion period with respect to any
treatment E receives that is related to E’s MS,
without regard to any prior creditable
coverage E may have. Beginning September
1, 2008, the plan will cover treatment of E’s
MS.
(ii) Conclusion. In this Example 2, the plan
complies with the requirements of this
section. (The plan is not required to comply
with the requirements of § 146.111 because
the plan continues to be exempted from those
requirements in accordance with the plan
sponsor’s election under § 146.180.)
Editorial Note: This document was
received at the Office of the Federal Register
on December 1, 2006.
Dated: July 16, 2004.
Mark B. McClellan,
Administrator, Centers for Medicare &
Medicaid Services.
Dated: November 28, 2005.
Michael O. Leavitt,
Secretary, Department of Health and Human
Services.
[FR Doc. 06–9557 Filed 12–12–06; 8:45 am]
BILLING CODE 4830–01–P; 4510–29–P; 4120–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[TD 9299]
RIN 1545–AY33
Exception to the HIPAA
Nondiscrimination Requirements for
Certain Grandfathered Church Plans
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations.
AGENCY:
SUMMARY: This document contains final
regulations that provide guidance under
section 9802(c) of the Internal Revenue
Code relating to the exception for
certain grandfathered church plans from
the nondiscrimination requirements
applicable to group health plans under
section 9802(a) and (b). Final
regulations relating to the
nondiscrimination requirements under
section 9802(a) and (b) are being
published elsewhere in this issue of the
Federal Register. The regulations will
generally affect sponsors of and
participants in certain self-funded
church plans that are group health
plans, and the regulations provide plan
sponsors and plan administrators with
PO 00000
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Fmt 4701
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75055
guidance necessary to comply with the
law.
DATES: Effective Date: These regulations
are effective February 12, 2007.
Applicability Date: These regulations
apply for plan years beginning on or
after July 1, 2007.
FOR FURTHER INFORMATION CONTACT: Russ
Weinheimer at 202–622–6080 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments
to the Miscellaneous Excise Tax
Regulations (26 CFR part 54) relating to
the exception for certain grandfathered
church plans from the
nondiscrimination requirements
applicable to group health plans. The
nondiscrimination requirements
applicable to group health plans were
added to the Internal Revenue Code
(Code), in section 9802, by the Health
Insurance Portability and
Accountability Act of 1996 (HIPAA),
Public Law 104–191 (110 Stat. 1936).
HIPAA also added similar
nondiscrimination provisions
applicable to group health plans and
health insurance issuers (such as health
insurance companies and health
maintenance organizations) under the
Employee Retirement Income Security
Act of 1974 (ERISA), administered by
the U.S. Department of Labor, and the
Public Health Service Act (PHS Act),
administered by the U.S. Department of
Health and Human Services.
Final regulations relating to the
HIPAA nondiscrimination requirements
in paragraphs (a) and (b) of section 9802
of the Code are being published
elsewhere in this issue of the Federal
Register. Those regulations are similar
to, and have been developed in
coordination with, final regulations also
being published today by the
Departments of Labor and of Health and
Human Services. Guidance under the
HIPAA nondiscrimination requirements
is summarized in a joint preamble to the
final regulations.
The exception for certain
grandfathered church plans was added
to section 9802, in subsection (c), by
section 1532 of the Taxpayer Relief Act
of 1997, Public Law 105–34 (111 Stat.
788). A notice of proposed rulemaking
on the exception for certain
grandfathered church plans and a
request for comments (REG–114083–00)
was published in the Federal Register of
January 8, 2001. Two written comments
were received. After consideration of
the comments, the proposed regulations
are adopted as amended by this
Treasury decision.
E:\FR\FM\13DER2.SGM
13DER2
75056
Federal Register / Vol. 71, No. 239 / Wednesday, December 13, 2006 / Rules and Regulations
Explanation and Summary of
Comments
One comment was pleased with the
guidance in the proposed rules and
asked that they be published as final
rules as soon as possible. The other
comment explained why the statute
needed this exception and suggested
that the proposed regulations did
nothing more than paraphrase the
statute. Neither comment asked for any
change in the proposed regulations.
These final regulations make no
significant substantive change to the
proposed regulations. An effective date
has been supplied and references to the
supplanted temporary regulations have
been deleted, but otherwise no change
has been made in the final regulations.
Special Analyses
It has been determined that this
Treasury decision is not a significant
regulatory action as defined in
Executive Order 12866. Therefore, a
regulatory assessment is not required. It
also has been determined that section
553(b) of the Administrative Procedure
Act (5 U.S.C. chapter 5) does not apply
to these regulations, and because the
regulations do not impose a collection
of information requirement on small
entities, the Regulatory Flexibility Act
(5 U.S.C. chapter 6) does not apply.
Therefore, a Regulatory Flexibility
Analysis is not required. Pursuant to
section 7805(f) of the Code, the notice
of proposed rulemaking preceding these
regulations was submitted to the Small
Business Administration for comment
on its impact on small business.
Drafting Information
The principal author of these
regulations is Russ Weinheimer, Office
of the Operating Division Counsel/
Associate Chief Counsel (Tax Exempt
and Government Entities). However,
other personnel from the IRS and
Treasury Department participated in
their development.
List of Subjects in 26 CFR Part 54
Excise taxes, Health care, Health
insurance, Pensions, Reporting and
recordkeeping requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 54 is
amended as follows:
I
rwilkins on PROD1PC63 with RULES_2
PART 54—PENSION EXCISE TAXES
Paragraph 1. The authority citation
for part 54 is amended by adding an
entry in numerical order to read, in part,
as follows:
I
Authority: 26 U.S.C. 7805 * * *
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20:15 Dec 12, 2006
Jkt 211001
Section 54.9802–2 also issued under 26
U.S.C. 9833. * * *
I Par. 2. In § 54.9801–1, paragraph (a) is
revised to read as follows:
§ 54.9801–1
Basis and scope.
(a) Statutory basis. Sections 54.9801–
1 through 54.9801–6, 54.9802–1,
54.9802–2, 54.9811–1T, 54.9812–1T,
54.9831–1, and 54.9833–1 (portability
sections) implement Chapter 100 of
Subtitle K of the Internal Revenue Code
of 1986.
*
*
*
*
*
I Par. 3. In § 54.9801–2, the
introductory text is revised to read as
follows:
§ 54.9801–2
Definitions.
Unless otherwise provided, the
definitions in this section govern in
applying the provisions of §§ 54.9801–1
through 54.9801–6, 54.9802–1, 54.9802–
2, 54.9811–1T, 54.9812–1T, 54.9831–1,
and 54.9833–1.
*
*
*
*
*
I Par. 4. Section 54.9802–2 is added to
read as follows:
§ 54.9802–2 Special rules for certain
church plans.
(a) Exception for certain church
plans—(1) Church plans in general. A
church plan described in paragraph (b)
of this section is not treated as failing to
meet the requirements of section 9802
or § 54.9802–1 solely because the plan
requires evidence of good health for
coverage of individuals under plan
provisions described in paragraph (b)(2)
or (3) of this section.
(2) Health insurance issuers. See
sections 2702 and 2721(b)(1)(B) of the
Public Health Service Act (42 U.S.C.
300gg–2 and 300gg–21(b)(1)(B)) and 45
CFR 146.121, which require health
insurance issuers providing health
insurance coverage under a church plan
that is a group health plan to comply
with nondiscrimination requirements
similar to those that church plans are
required to comply with under section
9802 and § 54.9802–1 except that those
nondiscrimination requirements do not
include an exception for health
insurance issuers comparable to the
exception for church plans under
section 9802(c) and this section.
(b) Church plans to which this section
applies—(1) Church plans with certain
coverage provisions in effect on July 15,
1997. This section applies to any church
plan (as defined in section 414(e)) for a
plan year if, on July 15, 1997 and at all
times thereafter before the beginning of
the plan year, the plan contains either
the provisions described in paragraph
(b)(2) of this section or the provisions
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Fmt 4701
Sfmt 4700
described in paragraph (b)(3) of this
section.
(2) Plan provisions applicable to
individuals employed by employers of
10 or fewer employees and selfemployed individuals. (i) A plan
contains the provisions described in this
paragraph (b)(2) if it requires evidence
of good health of both—
(A) Any employee of an employer of
10 or fewer employees (determined
without regard to section 414(e)(3)(C),
under which a church or convention or
association of churches is treated as the
employer); and
(B) Any self-employed individual.
(ii) A plan does not contain the
provisions described in this paragraph
(b)(2) if the plan contains only one of
the provisions described in this
paragraph (b)(2). Thus, for example, a
plan that requires evidence of good
health of any self-employed individual,
but not of any employee of an employer
with 10 or fewer employees, does not
contain the provisions described in this
paragraph (b)(2). Moreover, a plan does
not contain the provision described in
paragraph (b)(2)(i)(A) of this section if
the plan requires evidence of good
health of any employee of an employer
of fewer than 10 (or greater than 10)
employees. Thus, for example, a plan
does not contain the provision
described in paragraph (b)(2)(i)(A) of
this section if the plan requires evidence
of good health of any employee of an
employer with five or fewer employees.
(3) Plan provisions applicable to
individuals who enroll after the first 90
days of initial eligibility. (i) A plan
contains the provisions described in this
paragraph (b)(3) if it requires evidence
of good health of any individual who
enrolls after the first 90 days of initial
eligibility under the plan.
(ii) A plan does not contain the
provisions described in this paragraph
(b)(3) if it provides for a longer (or
shorter) period than 90 days. Thus, for
example, a plan requiring evidence of
good health of any individual who
enrolls after the first 120 days of initial
eligibility under the plan does not
contain the provisions described in this
paragraph (b)(3).
(c) Examples. The rules of this section
are illustrated by the following
examples:
Example 1. (i) Facts. A church organization
maintains two church plans for entities
affiliated with the church. One plan is a
group health plan that provides health
coverage to all employees (including
ministers and lay workers) of any affiliated
church entity that has more than 10
employees. The other plan is Plan O, which
is a group health plan that is not funded
through insurance coverage and that provides
E:\FR\FM\13DER2.SGM
13DER2
Federal Register / Vol. 71, No. 239 / Wednesday, December 13, 2006 / Rules and Regulations
rwilkins on PROD1PC63 with RULES_2
health coverage to any employee (including
ministers and lay workers) of any affiliated
church entity that has 10 or fewer employees
and any self-employed individual affiliated
with the church (including a self-employed
minister of the church). Plan O requires
evidence of good health in order for any
individual of a church entity that has 10 or
fewer employees to be covered and in order
for any self-employed individual to be
covered. On July 15, 1997 and at all times
thereafter before the beginning of the plan
year, Plan O has contained all the preceding
provisions.
(ii) Conclusion. In this Example 1, because
Plan O contains the plan provisions
described in paragraph (b)(2) of this section
and because those provisions were in the
plan on July 15, 1997 and at all times
thereafter before the beginning of the plan
year, Plan O will not be treated as failing to
meet the requirements of section 9802 or
§ 54.9802–1 for the plan year solely because
the plan requires evidence of good health for
coverage of the individuals described in
those plan provisions.
Example 2. (i) Facts. A church
organization maintains Plan P, which is a
church plan that is not funded through
insurance coverage and that is a group health
plan providing health coverage to individuals
employed by entities affiliated with the
church and self-employed individuals
VerDate Aug<31>2005
20:15 Dec 12, 2006
Jkt 211001
75057
affiliated with the church (such as ministers).
On July 15, 1997 and at all times thereafter
before the beginning of the plan year, Plan P
has required evidence of good health for
coverage of any individual who enrolls after
the first 90 days of initial eligibility under the
plan.
(ii) Conclusion. In this Example 2, because
Plan P contains the plan provisions described
in paragraph (b)(3) of this section and
because those provisions were in the plan on
July 15, 1997 and at all times thereafter
before the beginning of the plan year, Plan P
will not be treated as failing to meet the
requirements of section 9802 or § 54.9802–1
for the plan year solely because the plan
requires evidence of good health for coverage
of individuals enrolling after the first 90 days
of initial eligibility under the plan.
54.9802–1, 54.9802–2, 54.9811–1T,
54.9812–1T, and 54.9833–1 do not
apply to any group health plan for any
plan year if, on the first day of the plan
year, the plan has fewer than two
participants who are current employees.
(c) Excepted benefits—(1) In general.
The requirements of §§ 54.9801–1
through 54.9801–6, 54.9802–1, 54.9802–
2, 54.9811–1T, 54.9812–1T, and
54.9833–1 do not apply to any group
health plan in relation to its provision
of the benefits described in paragraph
(c)(2), (3), (4), or (5) of this section (or
any combination of these benefits).
*
*
*
*
*
(d) Applicability date. This section is
applicable to plan years beginning on or
after July 1, 2007.
I Par. 5. Section 54.9831–1 is amended
by revising paragraphs (b) and (c)(1) to
read as follows:
Mark E. Matthews,
Deputy Commissioner for Services and
Enforcement, Internal Revenue Service.
Approved: June 22, 2006.
Eric Solomon,
Acting Deputy Assistant Secretary of the
Treasury (Tax Policy).
§ 54.9831–1 Special rules relating to group
health plans.
*
*
*
*
*
(b) General exception for certain small
group health plans. The requirements of
§§ 54.9801–1 through 54.9801–6,
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Editorial Note: This document was
received at the Office of the Federal Register
on December 1, 2006.
[FR Doc. 06–9558 Filed 12–12–06; 8:45 am]
BILLING CODE 4830–01–P
E:\FR\FM\13DER2.SGM
13DER2
]]>Agencies
[Federal Register Volume 71, Number 239 (Wednesday, December 13, 2006)]
[Rules and Regulations]
[Pages 75055-75057]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-9558]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[TD 9299]
RIN 1545-AY33
Exception to the HIPAA Nondiscrimination Requirements for Certain
Grandfathered Church Plans
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: This document contains final regulations that provide guidance
under section 9802(c) of the Internal Revenue Code relating to the
exception for certain grandfathered church plans from the
nondiscrimination requirements applicable to group health plans under
section 9802(a) and (b). Final regulations relating to the
nondiscrimination requirements under section 9802(a) and (b) are being
published elsewhere in this issue of the Federal Register. The
regulations will generally affect sponsors of and participants in
certain self-funded church plans that are group health plans, and the
regulations provide plan sponsors and plan administrators with guidance
necessary to comply with the law.
DATES: Effective Date: These regulations are effective February 12,
2007.
Applicability Date: These regulations apply for plan years
beginning on or after July 1, 2007.
FOR FURTHER INFORMATION CONTACT: Russ Weinheimer at 202-622-6080 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments to the Miscellaneous Excise Tax
Regulations (26 CFR part 54) relating to the exception for certain
grandfathered church plans from the nondiscrimination requirements
applicable to group health plans. The nondiscrimination requirements
applicable to group health plans were added to the Internal Revenue
Code (Code), in section 9802, by the Health Insurance Portability and
Accountability Act of 1996 (HIPAA), Public Law 104-191 (110 Stat.
1936). HIPAA also added similar nondiscrimination provisions applicable
to group health plans and health insurance issuers (such as health
insurance companies and health maintenance organizations) under the
Employee Retirement Income Security Act of 1974 (ERISA), administered
by the U.S. Department of Labor, and the Public Health Service Act (PHS
Act), administered by the U.S. Department of Health and Human Services.
Final regulations relating to the HIPAA nondiscrimination
requirements in paragraphs (a) and (b) of section 9802 of the Code are
being published elsewhere in this issue of the Federal Register. Those
regulations are similar to, and have been developed in coordination
with, final regulations also being published today by the Departments
of Labor and of Health and Human Services. Guidance under the HIPAA
nondiscrimination requirements is summarized in a joint preamble to the
final regulations.
The exception for certain grandfathered church plans was added to
section 9802, in subsection (c), by section 1532 of the Taxpayer Relief
Act of 1997, Public Law 105-34 (111 Stat. 788). A notice of proposed
rulemaking on the exception for certain grandfathered church plans and
a request for comments (REG-114083-00) was published in the Federal
Register of January 8, 2001. Two written comments were received. After
consideration of the comments, the proposed regulations are adopted as
amended by this Treasury decision.
[[Page 75056]]
Explanation and Summary of Comments
One comment was pleased with the guidance in the proposed rules and
asked that they be published as final rules as soon as possible. The
other comment explained why the statute needed this exception and
suggested that the proposed regulations did nothing more than
paraphrase the statute. Neither comment asked for any change in the
proposed regulations.
These final regulations make no significant substantive change to
the proposed regulations. An effective date has been supplied and
references to the supplanted temporary regulations have been deleted,
but otherwise no change has been made in the final regulations.
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not required. It also has been
determined that section 553(b) of the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these regulations, and because the
regulations do not impose a collection of information requirement on
small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6)
does not apply. Therefore, a Regulatory Flexibility Analysis is not
required. Pursuant to section 7805(f) of the Code, the notice of
proposed rulemaking preceding these regulations was submitted to the
Small Business Administration for comment on its impact on small
business.
Drafting Information
The principal author of these regulations is Russ Weinheimer,
Office of the Operating Division Counsel/Associate Chief Counsel (Tax
Exempt and Government Entities). However, other personnel from the IRS
and Treasury Department participated in their development.
List of Subjects in 26 CFR Part 54
Excise taxes, Health care, Health insurance, Pensions, Reporting
and recordkeeping requirements.
Adoption of Amendments to the Regulations
0
Accordingly, 26 CFR part 54 is amended as follows:
PART 54--PENSION EXCISE TAXES
0
Paragraph 1. The authority citation for part 54 is amended by adding an
entry in numerical order to read, in part, as follows:
Authority: 26 U.S.C. 7805 * * *
Section 54.9802-2 also issued under 26 U.S.C. 9833. * * *
0
Par. 2. In Sec. 54.9801-1, paragraph (a) is revised to read as
follows:
Sec. 54.9801-1 Basis and scope.
(a) Statutory basis. Sections 54.9801-1 through 54.9801-6, 54.9802-
1, 54.9802-2, 54.9811-1T, 54.9812-1T, 54.9831-1, and 54.9833-1
(portability sections) implement Chapter 100 of Subtitle K of the
Internal Revenue Code of 1986.
* * * * *
0
Par. 3. In Sec. 54.9801-2, the introductory text is revised to read as
follows:
Sec. 54.9801-2 Definitions.
Unless otherwise provided, the definitions in this section govern
in applying the provisions of Sec. Sec. 54.9801-1 through 54.9801-6,
54.9802-1, 54.9802-2, 54.9811-1T, 54.9812-1T, 54.9831-1, and 54.9833-1.
* * * * *
0
Par. 4. Section 54.9802-2 is added to read as follows:
Sec. 54.9802-2 Special rules for certain church plans.
(a) Exception for certain church plans--(1) Church plans in
general. A church plan described in paragraph (b) of this section is
not treated as failing to meet the requirements of section 9802 or
Sec. 54.9802-1 solely because the plan requires evidence of good
health for coverage of individuals under plan provisions described in
paragraph (b)(2) or (3) of this section.
(2) Health insurance issuers. See sections 2702 and 2721(b)(1)(B)
of the Public Health Service Act (42 U.S.C. 300gg-2 and 300gg-
21(b)(1)(B)) and 45 CFR 146.121, which require health insurance issuers
providing health insurance coverage under a church plan that is a group
health plan to comply with nondiscrimination requirements similar to
those that church plans are required to comply with under section 9802
and Sec. 54.9802-1 except that those nondiscrimination requirements do
not include an exception for health insurance issuers comparable to the
exception for church plans under section 9802(c) and this section.
(b) Church plans to which this section applies--(1) Church plans
with certain coverage provisions in effect on July 15, 1997. This
section applies to any church plan (as defined in section 414(e)) for a
plan year if, on July 15, 1997 and at all times thereafter before the
beginning of the plan year, the plan contains either the provisions
described in paragraph (b)(2) of this section or the provisions
described in paragraph (b)(3) of this section.
(2) Plan provisions applicable to individuals employed by employers
of 10 or fewer employees and self-employed individuals. (i) A plan
contains the provisions described in this paragraph (b)(2) if it
requires evidence of good health of both--
(A) Any employee of an employer of 10 or fewer employees
(determined without regard to section 414(e)(3)(C), under which a
church or convention or association of churches is treated as the
employer); and
(B) Any self-employed individual.
(ii) A plan does not contain the provisions described in this
paragraph (b)(2) if the plan contains only one of the provisions
described in this paragraph (b)(2). Thus, for example, a plan that
requires evidence of good health of any self-employed individual, but
not of any employee of an employer with 10 or fewer employees, does not
contain the provisions described in this paragraph (b)(2). Moreover, a
plan does not contain the provision described in paragraph (b)(2)(i)(A)
of this section if the plan requires evidence of good health of any
employee of an employer of fewer than 10 (or greater than 10)
employees. Thus, for example, a plan does not contain the provision
described in paragraph (b)(2)(i)(A) of this section if the plan
requires evidence of good health of any employee of an employer with
five or fewer employees.
(3) Plan provisions applicable to individuals who enroll after the
first 90 days of initial eligibility. (i) A plan contains the
provisions described in this paragraph (b)(3) if it requires evidence
of good health of any individual who enrolls after the first 90 days of
initial eligibility under the plan.
(ii) A plan does not contain the provisions described in this
paragraph (b)(3) if it provides for a longer (or shorter) period than
90 days. Thus, for example, a plan requiring evidence of good health of
any individual who enrolls after the first 120 days of initial
eligibility under the plan does not contain the provisions described in
this paragraph (b)(3).
(c) Examples. The rules of this section are illustrated by the
following examples:
Example 1. (i) Facts. A church organization maintains two church
plans for entities affiliated with the church. One plan is a group
health plan that provides health coverage to all employees
(including ministers and lay workers) of any affiliated church
entity that has more than 10 employees. The other plan is Plan O,
which is a group health plan that is not funded through insurance
coverage and that provides
[[Page 75057]]
health coverage to any employee (including ministers and lay
workers) of any affiliated church entity that has 10 or fewer
employees and any self-employed individual affiliated with the
church (including a self-employed minister of the church). Plan O
requires evidence of good health in order for any individual of a
church entity that has 10 or fewer employees to be covered and in
order for any self-employed individual to be covered. On July 15,
1997 and at all times thereafter before the beginning of the plan
year, Plan O has contained all the preceding provisions.
(ii) Conclusion. In this Example 1, because Plan O contains the
plan provisions described in paragraph (b)(2) of this section and
because those provisions were in the plan on July 15, 1997 and at
all times thereafter before the beginning of the plan year, Plan O
will not be treated as failing to meet the requirements of section
9802 or Sec. 54.9802-1 for the plan year solely because the plan
requires evidence of good health for coverage of the individuals
described in those plan provisions.
Example 2. (i) Facts. A church organization maintains Plan P,
which is a church plan that is not funded through insurance coverage
and that is a group health plan providing health coverage to
individuals employed by entities affiliated with the church and
self-employed individuals affiliated with the church (such as
ministers). On July 15, 1997 and at all times thereafter before the
beginning of the plan year, Plan P has required evidence of good
health for coverage of any individual who enrolls after the first 90
days of initial eligibility under the plan.
(ii) Conclusion. In this Example 2, because Plan P contains the
plan provisions described in paragraph (b)(3) of this section and
because those provisions were in the plan on July 15, 1997 and at
all times thereafter before the beginning of the plan year, Plan P
will not be treated as failing to meet the requirements of section
9802 or Sec. 54.9802-1 for the plan year solely because the plan
requires evidence of good health for coverage of individuals
enrolling after the first 90 days of initial eligibility under the
plan.
(d) Applicability date. This section is applicable to plan years
beginning on or after July 1, 2007.
0
Par. 5. Section 54.9831-1 is amended by revising paragraphs (b) and
(c)(1) to read as follows:
Sec. 54.9831-1 Special rules relating to group health plans.
* * * * *
(b) General exception for certain small group health plans. The
requirements of Sec. Sec. 54.9801-1 through 54.9801-6, 54.9802-1,
54.9802-2, 54.9811-1T, 54.9812-1T, and 54.9833-1 do not apply to any
group health plan for any plan year if, on the first day of the plan
year, the plan has fewer than two participants who are current
employees.
(c) Excepted benefits--(1) In general. The requirements of
Sec. Sec. 54.9801-1 through 54.9801-6, 54.9802-1, 54.9802-2, 54.9811-
1T, 54.9812-1T, and 54.9833-1 do not apply to any group health plan in
relation to its provision of the benefits described in paragraph
(c)(2), (3), (4), or (5) of this section (or any combination of these
benefits).
* * * * *
Mark E. Matthews,
Deputy Commissioner for Services and Enforcement, Internal Revenue
Service.
Approved: June 22, 2006.
Eric Solomon,
Acting Deputy Assistant Secretary of the Treasury (Tax Policy).
Editorial Note: This document was received at the Office of the
Federal Register on December 1, 2006.
[FR Doc. 06-9558 Filed 12-12-06; 8:45 am]
BILLING CODE 4830-01-P
