The Internal Revenue Service (IRS) has made good on a pledge to give people who want to set up a new type of nonprofit, member-owned health insurer — a 501(c)(29) entity — some instructions about how to do so.
The IRS describes the procedures organizers of qualified nonprofit health insurance issuers (QNHIIs) in IRS Revenue Procedure 2012-11. The IRS developed the revenue procedure to help with implementation of the Consumer Operated and Oriented Plan (CO-OP) program described in Section 1322 of the Patient Protection and Affordable Care Act of 2010 (PPACA).
Members of Congress added the CO-OP section to PPACA in an effort to increase the level of competition in the health insurance market.
The QNHIIs that participate in the CO-OP program must make “substantially all” of their sales to individuals and small groups.
The QNHIIs in the CO-OP program are hoping to split $3.8 billion in federal PPACA CO-OP startup loans.