102 STAT. 3630
PUBLIC LAW 100-647—NOV. 10, 1988 unless under such plan such employee is entitled, when the coverage under the other h e ^ t h plan referred to in subparagraph (A)(i) ceases, to elect coverage under the plan of the employer (whether or not an election is otherwise available). Such election is to be on the same terms as if such employee was making such election during a subsequent open season. Rules similar to the rules of the preceding sentences of this subparagraph shall apply in the case of an employee treated as not having a spouse or dependents or having a spouse or dependents covered by a health plan of another employer providing core benefits."; and (B) by striking out ' and' at the end of subparagraph (BKi), by striking out the period at the end of subparagraph (B)(ii) and inserting in lieu thereof ", and", and by adding at the end thereof the following new clause: "(iii) the health coverage (if any) received by the employee from the employer." (9) DEFiNmoN OF PLAN.—Paragraph (11) of section 89(j) of the 1986 Code is amended by striking out "Each option" and inserting in lieu thereof "Except as provided in subsection (g)(D, each option". (10) MODIFICATION OF PENALTY.—Subparagraph (B) of section
6652fkX2) of the 1986 Ckxle is amended to read as follows: "(B) the amount which bears the same ratio to the employer-provided benefit (within the meaning of section 89 without regard to subsection (g)(BXCXi) thereof) with respect to the employee to whom such failure relates as the amount of such benefit required to be but not shown on timely statements under sections 6051(a) and 6051(d) bears to the amount required to be shown.". 01) CAFETERIA PLANS.—Subparagraph (D) of section 89(g)(3) of the 1986 Code is amended to read as follows: "(D) SALARY REDUCTIONS.—
"(i) IN GENERAL.—Except for purposes of subsections (d)(l)(A)(ii) and (j)(5), any salary reduction shall be treated as an employer-provided benefit. "(ii) SPECIAL RULE FOR SUBSECTION (d)(i)(a)(ii).—Notwithstanding clause (i), any salary reduction under a cafeteria plan (within the meaning of section 125) shall treated as an employer-provided benefit for purposes of subsection (d)( IXAXii) if— "(I) the percentage of employees who are not highly compensated employees eligible to participate in the plan is not greater than the percentage of highly compensated employees so eligible, "(II) all employees eligible to participate in the plan are eligible under the same terms and conditions, and "(III) no highly compensated employee eligible under the plan is eligible to participate in any other plan maintained by the employer for any benefit of the same type unless the benefit is available on the same terms and conditions to every employee who is not a highly compensated employee eligible to participate in the plan, "(iii) REGULATIONS.—Notwithstanding clause (i) or (ii), the Secretary may by regulations provide that any
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