The Internal Revenue Service (IRS) is asking how it ought to go about applying rules discouraging discrimination by self-insured employer health plans to insured group plans.
The IRS has raised the question in IRS Notice 2010-63, which addresses provisions prohibiting discrimination in favor of highly compensated individuals in insured group health plans.
The Affordable Care Act, the federal legislative package that includes the Patient Protection and Affordable Care Act (PPACA), has changed the provisions in the Public Health Service Act and put some of the Public Health Service Act provisions into the Internal Revenue Code (IRC) and the Employee Retirement Income Security Act (ERISA).
Starting in plan years that begin on or after Thursday, Section 2716 of the Public Health Service Act will impose an excise tax on group health plans that discriminate in favor of “highly compensated individuals.”
Since 1981, IRC Section 105(h) has taken the employer-sponsored health coverage exclusion away from highly compensated individuals who are in employer self-insured plans and get what the code defines as excess reimbursement.