Pension Protection Act Blog

The IRS issued a change in their position on the impact of Section 845 of the Pension Protection Act.

Earlier this year, in Notice 2007-7, the IRS issued Q&A 23, which states:

Q-23. Can the accident or health plan receiving the payments of qualified health insurance premiums be a self-insured plan?

A-23. No. The accident or health plan must be an accident or health insurance plan. Thus, the plan must be providing insurance issued by an insurance company regulated by a State (including a managed care organization that is treated as issuing insurance).

Today, the IRS issued Notice 2007-99 containing this change to Q&A 23 from Notice 2007-7:

Q-23. Can the accident or health plan receiving the payments of qualified health insurance premiums be a self-insured plan?

A-23. Yes. An accident or health plan, which is defined under § 105(e), includes a self-insured plan. See § 1.105-5(a) of the Income Tax Regulations.

The change from “No” to “Yes” is explained by the IRS as a reaction to one of the provision in the Pension Protection Technical Corrections Act of 2007, which is S. 1974 and H.R. 3361. Both bills contain identical provisions that revise Section 845(a) of the Pension Protection Act by deleting the word “insurance” from the term “accident or health insurance plan”, which occurs in both the definition of qualified health insurance premiums in Code section 402(l)(4)(D) and direct payment requirements in Code section 402(l)(5)(A).

Section 845 of PPA added Code section 402(l), which provides for Distributions from Governmental Plans for Health and Long-Term Care Insurance for eligible retired public safety officers.

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