Rules for Non-Grandfathered, Fully Insured Health Care Plans Suspended Indefinitely

On December 22, 2010 the IRS, Department of Labor, and Department of Health and Human Services indefinitely suspended compliance with the Section 105(h) nondiscrimination rules for non-grandfathered, fully insured health care plans. Earlier last year, health care reform legislation had included the application of Section 105(h) rules to fully insured coverage as of the first plan year beginning on September 23, 2010 or later, or the date the plan lost grandfathered status under the law.

The nondiscrimination rules would have prohibited health care plans from providing more favorable benefits and eligibility requirements to an employer’s highly compensated employees. The December 22 ruling does not alter the applicability of the rules to self-insured plans.