Alerts
Alerts
December 30, 2010

Compliance with Health Care Reform Nondiscrimination Rules Delayed

The Health Care Reform law made major changes in the way employers are and will be providing health benefits to their employees. One of the more significant changes is the requirement that insured health plans satisfy certain nondiscrimination rules.

This requirement applies only to insured health plans that are not grandfathered plans. For a more detailed explanation of grandfathered plans and the precise nondiscrimination rules, please consult our prior Health Care Reform alerts posted on our Health Care Reform page. click here

Nongrandfathered insured health plans were originally required to comply with the new nondiscrimination rules as of the first day of their plan years beginning after September 23, 2010. Failure to comply with these rules could result in significant excise taxes being imposed on the employer sponsoring the health plan.

In response to comments about the difficulty of complying with these new rules in the absence of any guidance, the Internal Revenue Service released Notice 2011-1. In that notice, the IRS, in conjunction with the Department of Labor and the Department of Health and Human Services, announced that compliance with the new nondiscrimination rules will not be required for plan years beginning before regulations or other administrative guidance have been issued.

In short, nongrandfathered insured health plans are not required to comply with the nondiscrimination rules until the IRS provides further notice. Employers should note, however, that the existing nondiscrimination rules applicable to self-funded group health plans continue to apply to both grandfathered and nongrandfathered self-funded plans.

Our Employee Benefits attorneys are available to discuss these rules with you. For more information, please contact:

Dale R. Vlasek

216.348.5452

dvlasek@mcdonaldhopkins.com

John M. Wirtshafter

216.348.5833

jwirtshafter@mcdonaldhopkins.com

Antoinette M. Pilzner

248.220.1341

apilzner@mcdonaldhopkins.com

or any of our Employee Benefits attorneys by clicking on the Employee Benefits link below:

Employee Benefits

Benefit programs should be a win-win for employers and employees. We strive to accomplish that goal in the design, implementation and operation of sophisticated benefit and executive compensation programs – qualified and non-qualified retirement programs and health and welfare plans. Our employee benefits team has a long track record of working to maximize the efficiency and economic feasibility of each program.

Carl J. Grassi, President
600 Superior Avenue, East, Suite 2100, Cleveland, Ohio 44114
IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any tax advice contained in this communication (including any attachments), was not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding any penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction matter addressed herein.