An Early Joint Gift from the IRS, DOL and HHS:
NO 105(h) Nondiscrimination Compliance or Penalties until Regulations Are Issued
The Internal Revenue Service and Departments of Labor and Health and Human Services issued a letter today delaying compliance with the new Patient Protection and Affordable Care Act provisions that applied rules similar to the nondiscrimination requirements of Section 105(h)(2) to insured group health plans. PPACA requires that all fully insured group health insurance plans that do not have grandfathered status may not discriminate in favor of highly compensated individuals in regards to either eligibility to participate in the plan or the level of benefits provided. However, the rules guiding how this requirement would be applied to fully insured plans have not been released, leading many small businesses and their agents and brokers to struggle with how the nondiscrimination tests (which were designed for very large companies) would apply to small-group health plans.
The new bulletin states that the relevant federal agencies and departments have determined that compliance with these requirements should not be required until after regulations or other federal guidance has been issued and, accordingly, any noncompliance sanctions or penalties are delayed too. The bulletin also asks for public comment on the decision, which NAHU will be submitting on behalf of its members.