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Exempt Rules to Be Set for Nonprofit Insurers

WASHINGTON (CN) - The Internal Revenue Service has issued regulations allowing its commissioner to indicate how qualified nonprofit health insurance issuers may receive tax exempt status. The regulations temporarily put the rule in place while a permanent rule goes through the usual rulemaking process.

An issuer that has received a loan through the Centers for Medicare and Medicaid Services' Consumer Operated and Oriented Plan program may be exempt from paying federal income taxes if, among other things, the issuer gives notice to the IRS that it is applying for recognition as a qualified nonprofit health insurance issuer. These temporary regulations provide that the commissioner may prescribe the application procedures for this recognition.

A health insurance issuer may receive a loan or repayable grant from the Consumer Operated and Oriented Plan program if it is a member-governed qualified nonprofit health insurance issuer that will operate with a strong consumer focus and offer qualified health insurance plans.

These temporary regulations expressly authorize the commissioner to recognize an issuer as exempt, effective as of a date prior to the date of its application, provided that the application is submitted in the manner and within the time prescribed by the commissioner and the issuer's prior purposes and activities were consistent with the requirements for exempt status as a qualified nonprofit health insurance issuer.

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