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Internal Revenue Code, § 9831. General Exceptions

I.R.C. § 9831(a) Exception For Certain Plans
The requirements of this chapter shall not apply to—
I.R.C. § 9831(a)(1)
any governmental plan, and
I.R.C. § 9831(a)(2)
any group health plan for any plan year if, on the first day of such plan year, such plan has less than 2 participants who are current employees.
I.R.C. § 9831(b) Exception For Certain Benefits
The requirements of this chapter shall not apply to any group health plan in relation to its provision of excepted benefits described in section 9832(c)(1).
I.R.C. § 9831(c) Exception For Certain Benefits If Certain Conditions Met
I.R.C. § 9831(c)(1) Limited, Excepted Benefits
The requirements of this chapter shall not apply to any group health plan in relation to its provision of excepted benefits described in section 9832(c)(2) if the benefits—
I.R.C. § 9831(c)(1)(A)
are provided under a separate policy, certificate, or contract of insurance; or
I.R.C. § 9831(c)(1)(B)
are otherwise not an integral part of the plan.
I.R.C. § 9831(c)(2) Noncoordinated, Excepted Benefits
The requirements of this chapter shall not apply to any group health plan in relation to its provision of excepted benefits described in section 9832(c)(3) if all of the following conditions are met:
I.R.C. § 9831(c)(2)(A)
The benefits are provided under a separate policy, certificate, or contract of insurance.
I.R.C. § 9831(c)(2)(B)
There is no coordination between the provision of such benefits and any exclusion of benefits under any group health plan maintained by the same plan sponsor.
I.R.C. § 9831(c)(2)(C)
Such benefits are paid with respect to an event without regard to whether benefits are provided with respect to such an event under any group health plan maintained by the same plan sponsor.
I.R.C. § 9831(c)(3) Supplemental Excepted Benefits
The requirements of this chapter shall not apply to any group health plan in relation to its provision of excepted benefits described in section 9832(c)(4) if the benefits are provided under a separate policy, certificate, or contract of insurance.
I.R.C. § 9831(d) Exception For Qualified Small Employer Health Reimbursement Arrangements
I.R.C. § 9831(d)(1) In General
For purposes of this title (except as provided in section 4980I(f)(4) and notwithstanding any other provision of this title), the term “group health plan” shall not include any qualified small employer health reimbursement arrangement.
I.R.C. § 9831(d)(2) Qualified Small Employer Health Reimbursement Arrangement
For purposes of this subsection—
I.R.C. § 9831(d)(2)(A) In General
The term “qualified small employer health reimbursement arrangement” means an arrangement which—
I.R.C. § 9831(d)(2)(A)(i)
is described in subparagraph (B), and
I.R.C. § 9831(d)(2)(A)(ii)
is provided on the same terms to all eligible employees of the eligible employer.
I.R.C. § 9831(d)(2)(B) Arrangement Described
An arrangement is described in this subparagraph if—
I.R.C. § 9831(d)(2)(B)(i)
such arrangement is funded solely by an eligible employer and no salary reduction contributions may be made under such arrangement,
I.R.C. § 9831(d)(2)(B)(ii)
such arrangement provides, after the employee provides proof of coverage, for the payment of, or reimbursement of, an eligible employee for expenses for medical care (as defined in section 213(d)) incurred by the eligible employee or the eligible employee's family members (as determined under the terms of the arrangement), and
I.R.C. § 9831(d)(2)(B)(iii)
the amount of payments and reimbursements described in clause (ii) for any year do not exceed $4,950 ($10,000 in the case of an arrangement that also provides for payments or reimbursements for family members of the employee).
I.R.C. § 9831(d)(2)(C) Certain Variation Permitted
For purposes of subparagraph (A)(ii), an arrangement shall not fail to be treated as provided on the same terms to each eligible employee merely because the employee's permitted benefit under such arrangement varies in accordance with the variation in the price of an insurance policy in the relevant individual health insurance market based on—
I.R.C. § 9831(d)(2)(C)(i)
the age of the eligible employee (and, in the case of an arrangement which covers medical expenses of the eligible employee's family members, the age of such family members), or
I.R.C. § 9831(d)(2)(C)(ii)
the number of family members of the eligible employee the medical expenses of which are covered under such arrangement.
The variation permitted under the preceding sentence shall be determined by reference to the same insurance policy with respect to all eligible employees.
I.R.C. § 9831(d)(2)(D) Rules Relating To Maximum Dollar Limitation
I.R.C. § 9831(d)(2)(D)(i) Amount Prorated In Certain Cases
In the case of an individual who is not covered by an arrangement for the entire year, the limitation under subparagraph (B)(iii) for such year shall be an amount which bears the same ratio to the amount which would (but for this clause) be in effect for such individual for such year under subparagraph (B)(iii) as the number of months for which such individual is covered by the arrangement for such year bears to 12.
I.R.C. § 9831(d)(2)(D)(ii) Inflation Adjustment
In the case of any year beginning after 2016, each of the dollar amounts in subparagraph (B)(iii) shall be increased by an amount equal to—
I.R.C. § 9831(d)(2)(D)(ii)(I)
(I) such dollar amount, multiplied by
I.R.C. § 9831(d)(2)(D)(ii)(II)
the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “calendar year 2015” for “calendar year 2016” in subparagraph (A)(ii) thereof.
If any dollar amount increased under the preceding sentence is not a multiple of $50, such dollar amount shall be rounded to the next lowest multiple of $50.
I.R.C. § 9831(d)(3) Other Definitions
For purposes of this subsection—
I.R.C. § 9831(d)(3)(A) Eligible Employee
The term “eligible employee” means any employee of an eligible employer, except that the terms of the arrangement may exclude from consideration employees described in any clause of section 105(h)(3)(B) (applied by substituting “90 days” for “3 years” in clause (i) thereof).
I.R.C. § 9831(d)(3)(B) Eligible Employer
The term “eligible employer” means an employer that—
I.R.C. § 9831(d)(3)(B)(i)
is not an applicable large employer as defined in section 4980H(c)(2), and
I.R.C. § 9831(d)(3)(B)(ii)
does not offer a group health plan to any of its employees.
I.R.C. § 9831(d)(3)(C) Permitted Benefit
The term “permitted benefit” means, with respect to any eligible employee, the maximum dollar amount of payments and reimbursements which may be made under the terms of the qualified small employer health reimbursement arrangement for the year with respect to such employee.
I.R.C. § 9831(d)(4) Notice
I.R.C. § 9831(d)(4)(A) In General
An employer funding a qualified small employer health reimbursement arrangement for any year shall, not later than 90 days before the beginning of such year (or, in the case of an employee who is not eligible to participate in the arrangement as of the beginning of such year, the date on which such employee is first so eligible), provide a written notice to each eligible employee which includes the information described in subparagraph (B).
I.R.C. § 9831(d)(4)(B) Contents Of Notice
The notice required under subparagraph (A) shall include each of the following:
I.R.C. § 9831(d)(4)(B)(i)
A statement of the amount which would be such eligible employee's permitted benefit under the arrangement for the year.
I.R.C. § 9831(d)(4)(B)(ii)
A statement that the eligible employee should provide the information described in clause (i) to any health insurance exchange to which the employee applies for advance payment of the premium assistance tax credit.
I.R.C. § 9831(d)(4)(B)(iii)
A statement that if the employee is not covered under minimum essential coverage for any month the employee may be subject to tax under section 5000A for such month and reimbursements under the arrangement may be includible in gross income.
(Added Pub. L. 104-191, Sec. 401, Aug. 21, 1996, 110 Stat. 1936; Pub. L. 114-255, Div. C, title XVIII, Sec. 18001(a)(1), Dec. 13, 2016; Pub. L. 115-97, title I, Sec. 11002(d)(1)(TT), Dec. 22, 2017, 131 Stat. 2054.)
BACKGROUND NOTES
AMENDMENTS
2017 — Subsec. (d)(2)(D)(ii)(II). Pub. L. 115-97, Sec. 11002(d)(1)(TT), amended subclause (II) by substituting “for ‘calendar year 2016’ in subparagraph (A)(ii)” for ‘‘for ‘calendar year 1992’ in subparagraph (B)’’.
2016 - Subsec. (d). Pub. L. 114-255, Sec. 18001(a)(1), added subsec. (d).
1997 - Pub. L. 105-34, Sec. 1531(a)(2), redesignated Section 9804 as Section 9831.
Subsec. (b). Pub. L. 105-34, Sec. 1531(b)(1)(B), substituted “section 9832(c)(1)” for “section 9805(c)(1)”.
Subsec. (c)(1). Pub. L. 105-34, Sec. 1531(b)(1)(C), substituted “section 9832(c)(2)” for “section 9805(c)(2)”.
Subsec. (c)(2). Pub. L. 105-34, Sec. 1531(b)(1)(D), substituted “section 9832(c)(3)” for “section 9805(c)(3)”.
Subsec. (c)(3). Pub. L. 105-34, Sec. 1531(b)(1)(E), substituted “section 9832(c)(4)” for “section 9805(c)(4)”.
EFFECTIVE DATE OF 2017 AMENDMENT
Amendment by Pub. L. 115-97, Sec. 11002(d)(1)(TT), effective for taxable years beginning after December 31, 2017.
EFFECTIVE DATE OF 2016 AMENDMENT
Amendment by Sec. 18001(a)(1) of Pub. L. 114-255, effective for years beginning after December 31, 2016.
EFFECTIVE DATE OF 1997 AMENDMENTS
Amendments by Sec. 1531 of Pub. L. 105-34 applicable with respect to group health plans for years beginning on or after January 1, 1998.
EFFECTIVE DATE
Effective, except as otherwise noted, for plan years beginning after June 30, 1997.
Section 401(c) of Pub. L. 104-191 provided that:
“(2) Determination of creditable coverage.--
(A) Period of coverage.--
(i) In general.--Subject to clause (ii), no period before July 1, 1996, shall be taken into account under chapter 100 of the Internal Revenue Code of 1986 (as added by this section) in determining creditable coverage.
(ii) Special rule for certain periods.--The Secretary of the Treasury, consistent with section 104, shall provide for a process whereby individuals who need to establish creditable coverage for periods before July 1, 1996, and who would have such coverage credited but for clause (i) may be given credit for creditable coverage for such periods through the presentation of documents or other means.
(B) Certifications, etc.--
(i) In general.--Subject to clauses (ii) and (iii), subsection (e) of section 9801 of the Internal Revenue Code of 1986 (as added by this section) shall apply to events occurring after June 30, 1996.
(ii) No certification required to be provided before June 1, 1997.-- In no case is a certification required to be provided under such subsection before June 1, 1997.
(iii) Certification only on written request for events occurring before October 1, 1996.--In the case of an event occurring after June 30, 1996, and before October 1, 1996, a certification is not required to be provided under such subsection unless an individual (with respect to whom the certification is otherwise required to be made) requests such certification in writing.
(C) Transitional rule.--In the case of an individual who seeks to establish creditable coverage for any period for which certification is not required because it relates to an event occurring before June 30, 1996--
(i) the individual may present other credible evidence of such coverage in order to establish the period of creditable coverage; and
(ii) a group health plan and a health insurance issuer shall not be subject to any penalty or enforcement action with respect to the plan's or issuer's crediting (or not crediting) such coverage if the plan or issuer has sought to comply in good faith with the applicable requirements under the amendments made by this section.
(3) Special rule for collective bargaining agreements.-- Except as provided in paragraph (2), in the case of a group health plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and one or more employers ratified before the date of the enactment of this Act [Aug. 21, 1996], the amendments made by this section shall not apply to plan years beginning before the later of-- (A) the date on which the last of the collective bargaining agreements relating to the plan terminates (determined without regard to any extension thereof agreed to after the date of the enactment of this Act [Aug. 21, 1996), or
(B) July 1, 1997. For purposes of subparagraph (A), any plan amendment made pursuant to a collective bargaining agreement relating to the plan which amends the plan solely to conform to any requirement added by this section shall not be treated as a termination of such collective bargaining agreement.
(4) Timely regulations.--The Secretary of the Treasury, consistent with section 104, shall first issue by not later than April 1, 1997, such regulations as may be necessary to carry out the amendments made by this section.
(5) Limitation on actions.--No enforcement action shall be taken, pursuant to the amendments made by this section, against a group health plan or health insurance issuer with respect to a violation of a requirement imposed by such amendments before January 1, 1998, or, if later, the date of issuance of regulations referred to in paragraph (4), if the plan or issuer has sought to comply in good faith with such requirements.”