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Legal Update

Employers Subject to Harsh Penalties if Insured Group Health Plan Favors Highly Paid Employees

29 October 2010
Mayer Brown Legal Update
Notice 2010-63 (the “Notice”), released by the US Internal Revenue Service on September 20, 2010, addresses the application of nondiscrimination requirements to insured group health plans as provided by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (the “Act”). Prior to the Act, self-insured group health plans were subject to nondiscrimination rules, but insured plans generally were not. Although the stated purpose of the Notice is to solicit comments regarding the application of the Act to insured group health plans, the Act and the Notice raise substantive issues regarding application of the nondiscrimination rules to insured arrangements.
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