Applying 105(h) Rules May Require New Plan Design Approach

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The extension of tax code Section 105(h) nondiscrimination rules to insured group health plans has created uncertainty about how post-termination benefits and retiree-only health insurance might be affected, Jason Bortz, a partner at Davis & Harman, Washington, D.C., says at a District of Columbia Bar event. The Section 105(h) nondiscrimination rules created by the new health care reform law may not affect post-termination benefits, Bortz says. But in the absence of guidance from the Treasury Department and IRS, practitioners and plan sponsors cannot be certain about how the Section 105(h) rules will be applied under the law to insured group health plans that cover no active employees, he says.