The Patient Protection and Affordable Care Act ("Act") enacted on March 23, 2010 included a provision requiring insured group health plans (other than grandfathered health plans) to satisfy the nondiscrimination requirements of Internal Revenue Code ("Code") Section 105(h)(2). Prior to the Act, Code Section 105(h) only applied to self-insured health plans and required that they not discriminate in favor of highly compensated individuals as to eligibility to participate in the plan or in favor of highly compensated participants as to benefits available under the plan. The Act provided for the first time that insured group health plans comply with Code Section 105(h) under "rules similar to the rules" that applied to self-insured plans. In a Notice issued on December 22, 2010, the IRS has suspended application and enforcement of this rule for insured group health plans until regulatory guidance is issued.
Under the Act, an insured group health plan that failed to comply with the new nondiscrimination rules could have been subject to (1) an excise tax of $100 for each day of noncompliance with respect to each individual to whom such noncompliance relates (with certain exceptions), (2) in the case of a non-Federal governmental group health plan, civil money penalties under the Public Health Services Act of up to $100 per day per individual for each day the plan does not comply with the requirements (with certain exceptions), or (3) a civil action to enjoin a noncompliant act or practice or for other appropriate equitable relief under the Employee Retirement Income Security Act of 1974 ("ERISA").