IRS Pushes Back PPACA Nondiscrimination Compliance Date

December 22, 2010 ( – The Internal Revenue Service (IRS) has published a notice pushing back the timing for compliance with certain nondiscrimination requirements of the Patient Protection and Affordable Care Act (PPACA).


Specifically, Notice 2011-1 states that the Treasury Department and the IRS, as well as the Departments of Labor and Health and Human Services, have determined that compliance with the non-discrimination requirements of § 2716 [of the Affordable Care Act] should not be required (and thus, any sanctions for failure to comply do not apply) until after regulations or other administrative guidance of general applicability has been issued under § 2716.”

The notice also includes a request for public comments on the regulation, including:

  • The basis on which the determination of what constitutes non-discriminatory benefits under § 105(h)(4) should be made and what is included in the term “benefits.”
  • The suggestion made in previous comments that the Departments have the authority to provide for an alternative method of compliance with § 2716 that would involve only an availability of coverage test.
  • The application of § 2716 to insured group health plans beginning in 2014 when the health insurance exchanges become operational and the employer responsibility provisions (§ 4980H of the Code), the premium tax credit (§ 36B of the Code), and the individual responsibility provisions (§ 5000A of the Code) and related Affordable Care Act provisions are effective.
  • The suggestion in previous comments that the nondiscriminatory classification provision in § 105(h)(3)(A)(iii) could be used as a basis to permit an insured health care plan to use a highly compensated employee definition in § 414(q) of the Code for purposes of determining the plan’s nondiscriminatory classification.
  • The suggestion in previous comments that the nondiscrimination standards should be applied separately to employers sponsoring insured group health plans in distinct geographic locations and on whether application of the standards on a geographic basis should be permissive or mandatory.
  • The suggestion in previous comments that the guidance should provide for “safe harbor” plan designs. Specifically, comments are requested on potential safe and unsafe harbor designs that are consistent with the substantive requirements of § 105(h).
  • Whether employers should be permitted to aggregate different, but substantially similar, coverage options for purposes of § 2716 and, if so, the basis upon which a “substantially similar” determination could be made.
  • The application of the nondiscrimination rules to “expatriate” and “inpatriate” coverage.
  • The application of the nondiscrimination rules to multiple employer plans.
  • The suggestion in previous comments that coverage provided to a “highly compensated individual” (as defined in § 105(h)(5)) on an after-tax basis should be disregarded in applying § 2716.
  • The treatment of employees who voluntarily waive employer coverage in favor of other coverage.
  • Potential transition rules following a merger, acquisition, or other corporate transaction.
  • The application of the sanctions for noncompliance with § 2716.

Comments must be submitted by March 11, 2011.  Comments should be submitted to Internal Revenue Service, CC:PA:LPD:RU (Notice 2011-1), Room 5203, PO Box 7604, Ben Franklin Station, Washington, DC 20224. Submissions may also be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to the Courier’s Desk, 1111 Constitution Avenue, NW, Washington, DC 20224, Attn: CC:PA:LPD:RU (Notice 2011-1), Room 5203. The IRS notes that submissions may also be sent electronically via the internet to the following e-mail address:, but asks that you include the notice number (Notice 2011-1) in the subject line.

The text of Notice 2011-1 is online at