PUBLIC LAW 99-272—APR. 7, 1986
100 STAT. 223
unless all such plans maintained by such employer meet the continuing coverage requirements of subsection (k). "(B) EXCEPTION FOR CERTAIN SMALL EMPLOYERS, ETC.—
Subparagraph (A) shall not apply to any plan described in section 106(b)(2).". (b) DENIAL OF EXCLUSION FOR HIGHLY COMPENSATED INDIVID-
26 USC 106.
UALS.—Section 106 of the Internal Revenue Code of 1954 (relating to contributions by employer to accident and health plans) is amended by inserting "(a) IN GENERAL.—" before "Gross" and by inserting at the end thereof the following new subsection: "(b) EXCEPTION FOR HIGHLY COMPENSATED INDIVIDUALS WHERE PLAN FAILS TO PROVIDE CERTAIN CONTINUATION COVERAGE.—
"(1) IN GENERAL.—Subsection (a) shall not apply to any amount contributed by an employer on behalf of a highly compensated individual (within the meaning of section 105(h)(5)) to a group health plan maintained by such employer unless all such plans maintained by such employer meet the continuing coverage requirements of section 162(k). "(2) EXCEPTION FOR CERTAIN PLANS.—Paragraph (1) shall not apply to any— "(A) group health plan for any calendar year if all employers maintaining such plan normally employed fewer than 20 employees on a typical business day during the preceding calendar year, "(B) governmental plan (within the meaning of section 414(d)), or "(C) church plan (within the meaning of section 414(e)). Under regulations, rules similar to the rules of subsections (a) and (b) of section 52 (relating to employers under common control) shall apply for purposes of subparagraph (A). "(3) GROUP HEALTH PLAN.—For purposes of this subsection, the term 'group health plan' has the meaning given such term by section 162(i)(3).". (c) CONTINUATION COVERAGE REQUIREMENTS.—Section 162 of the
Internal Revenue Code of 1954 is amended by redesignating subsec- 26 USC 162. tion (k) as subsection (1) and by inserting after subsection (j) the following new subsection: "(k) CONTINUATION COVERAGE REQUIREMENTS OF GROUP HEALTH PLANS.—
"(1) IN GENERAL.—For purposes of subsection (i)(2) and section 106(b)(1), a group health plan meets the requirements of this subsection only if each qualified beneficiary who would lose coverage under the plan as a result of a qualifying event is entitled to elect, within the election period, continuation coverage under the plan. "(2) CONTINUATION COVERAGE.—For purposes of paragraph (1),
the term 'continuation coverage' means coverage under the plan which meets the following requirements: "(A) TYPE OF BENEFIT COVERAGE.—The coverage must consist of coverage which, as of the time the coverage is being provided, is identical to the coverage provided under the plan to similarly situated beneficiaries under the plan with respect to whom a qualifying event has not occurred. "(B) PERIOD OF COVERAGE.—The coverage must extend for at least the period beginning on the date of the qualifying event and ending not earlier than the earliest of the following-
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