
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC4980B]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                 Subtitle D--Miscellaneous Excise Taxes
 
               CHAPTER 43--QUALIFIED PENSION, ETC., PLANS
 
Sec. 4980B. Failure to satisfy continuation coverage 
        requirements of group health plans
        

(a) General rule

    There is hereby imposed a tax on the failure of a group health plan 
to meet the requirements of subsection (f) with respect to any qualified 
beneficiary.

(b) Amount of tax

                           (1) In general

        The amount of the tax imposed by subsection (a) on any failure 
    with respect to a qualified beneficiary shall be $100 for each day 
    in the noncompliance period with respect to such failure.

                      (2) Noncompliance period

        For purposes of this section, the term ``noncompliance period'' 
    means, with respect to any failure, the period--
            (A) beginning on the date such failure first occurs, and
            (B) ending on the earlier of--
                (i) the date such failure is corrected, or
                (ii) the date which is 6 months after the last day in 
            the period applicable to the qualified beneficiary under 
            subsection (f)(2)(B) (determined without regard to clause 
            (iii) thereof).

    If a person is liable for tax under subsection (e)(1)(B) by reason 
    of subsection (e)(2)(B) with respect to any failure, the 
    noncompliance period for such person with respect to such failure 
    shall not begin before the 45th day after the written request 
    described in subsection (e)(2)(B) is provided to such person.

       (3) Minimum tax for noncompliance period where failure 
                   discovered after notice of examination

        Notwithstanding paragraphs (1) and (2) of subsection (c)--

        (A) In general

            In the case of 1 or more failures with respect to a 
        qualified beneficiary--
                (i) which are not corrected before the date a notice of 
            examination of income tax liability is sent to the employer, 
            and
                (ii) which occurred or continued during the period under 
            examination,

        the amount of tax imposed by subsection (a) by reason of such 
        failures with respect to such beneficiary shall not be less than 
        the lesser of $2,500 or the amount of tax which would be imposed 
        by subsection (a) without regard to such paragraphs.

        (B) Higher minimum tax where violations are more than de minimis

            To the extent violations by the employer (or the plan in the 
        case of a multiemployer plan) for any year are more than de 
        minimis, subparagraph (A) shall be applied by substituting 
        ``$15,000'' for ``$2,500'' with respect to the employer (or such 
        plan).

(c) Limitations on amount of tax

    (1) Tax not to apply where failure not discovered exercising 
                            reasonable diligence

        No tax shall be imposed by subsection (a) on any failure during 
    any period for which it is established to the satisfaction of the 
    Secretary that none of the persons referred to in subsection (e) 
    knew, or exercising reasonable diligence would have known, that such 
    failure existed.

      (2) Tax not to apply to failures corrected within 30 days

        No tax shall be imposed by subsection (a) on any failure if--
            (A) such failure was due to reasonable cause and not to 
        willful neglect, and
            (B) such failure is corrected during the 30-day period 
        beginning on the 1st date any of the persons referred to in 
        subsection (e) knew, or exercising reasonable diligence would 
        have known, that such failure existed.

    (3) $100 limit on amount of tax for failures on any day with 
                     respect to a qualified beneficiary

        (A) In general

            Except as provided in subparagraph (B), the maximum amount 
        of tax imposed by subsection (a) on failures on any day during 
        the noncompliance period with respect to a qualified beneficiary 
        shall be $100.

        (B) Special rule where more than 1 qualified beneficiary

            If there is more than 1 qualified beneficiary with respect 
        to the same qualifying event, the maximum amount of tax imposed 
        by subsection (a) on all failures on any day during the 
        noncompliance period with respect to such qualified 
        beneficiaries shall be $200.

          (4) Overall limitation for unintentional failures

        In the case of failures which are due to reasonable cause and 
    not to willful neglect--

        (A) Single employer plans

            (i) In general

                In the case of failures with respect to plans other than 
            multiemployer plans, the tax imposed by subsection (a) for 
            failures during the taxable year of the employer shall not 
            exceed the amount equal to the lesser of--
                    (I) 10 percent of the aggregate amount paid or 
                incurred by the employer (or predecessor employer) 
                during the preceding taxable year for group health 
                plans, or
                    (II) $500,000.
            (ii) Taxable years in the case of certain controlled 
                    groups

                For purposes of this subparagraph, if not all persons 
            who are treated as a single employer for purposes of this 
            section have the same taxable year, the taxable years taken 
            into account shall be determined under principles similar to 
            the principles of section 1561.

        (B) Multiemployer plans

            (i) In general

                In the case of failures with respect to a multiemployer 
            plan, the tax imposed by subsection (a) for failures during 
            the taxable year of the trust forming part of such plan 
            shall not exceed the amount equal to the lesser of--
                    (I) 10 percent of the amount paid or incurred by 
                such trust during such taxable year to provide medical 
                care (as defined in section 213(d)) directly or through 
                insurance, reimbursement, or otherwise, or
                    (II) $500,000.

          For purposes of the preceding sentence, all plans of which the 
            same trust forms a part shall be treated as 1 plan.
            (ii) Special rule for employers required to pay tax

                If an employer is assessed a tax imposed by subsection 
            (a) by reason of a failure with respect to a multiemployer 
            plan, the limit shall be determined under subparagraph (A) 
            (and not under this subparagraph) and as if such plan were 
            not a multiemployer plan.

        (C) Special rule for persons providing benefits

            In the case of a person described in subsection (e)(1)(B) 
        (and not subsection (e)(1)(A)), the aggregate amount of tax 
        imposed by subsection (a) for failures during a taxable year 
        with respect to all plans shall not exceed $2,000,000.

                       (5) Waiver by Secretary

        In the case of a failure which is due to reasonable cause and 
    not to willful neglect, the Secretary may waive part or all of the 
    tax imposed by subsection (a) to the extent that the payment of such 
    tax would be excessive relative to the failure involved.

(d) Tax not to apply to certain plans

    This section shall not apply to--
        (1) any failure of a group health plan to meet the requirements 
    of subsection (f) with respect to any qualified beneficiary if the 
    qualifying event with respect to such beneficiary occurred during 
    the calendar year immediately following a calendar year during which 
    all employers maintaining such plan normally employed fewer than 20 
    employees on a typical business day,
        (2) any governmental plan (within the meaning of section 
    414(d)), or
        (3) any church plan (within the meaning of section 414(e)).

(e) Liability for tax

                           (1) In general

        Except as otherwise provided in this subsection, the following 
    shall be liable for the tax imposed by subsection (a) on a failure:
            (A)(i) In the case of a plan other than a multiemployer 
        plan, the employer.
            (ii) In the case of a multiemployer plan, the plan.
            (B) Each person who is responsible (other than in a capacity 
        as an employee) for administering or providing benefits under 
        the plan and whose act or failure to act caused (in whole or in 
        part) the failure.

     (2) Special rules for persons described in paragraph (1)(B)

        (A) No liability unless written agreement

            Except in the case of liability resulting from the 
        application of subparagraph (B) of this paragraph, a person 
        described in subparagraph (B) (and not in subparagraph (A)) of 
        paragraph (1) shall be liable for the tax imposed by subsection 
        (a) on any failure only if such person assumed (under a legally 
        enforceable written agreement) responsibility for the 
        performance of the act to which the failure relates.

        (B) Failure to cover qualified beneficiaries where current 
                employees are covered

            A person shall be treated as described in paragraph (1)(B) 
        with respect to a qualified beneficiary if--
                (i) such person provides coverage under a group health 
            plan for any similarly situated beneficiary under the plan 
            with respect to whom a qualifying event has not occurred, 
            and
                (ii) the--
                    (I) employer or plan administrator, or
                    (II) in the case of a qualifying event described in 
                subparagraph (C) or (E) of subsection (f)(3) where the 
                person described in clause (i) is the plan 
                administrator, the qualified beneficiary,

          submits to such person a written request that such person make 
            available to such qualified beneficiary the same coverage 
            which such person provides to the beneficiary referred to in 
            clause (i).

(f) Continuation coverage requirements of group health plans

                           (1) In general

        A group health plan meets the requirements of this subsection 
    only if the coverage of the costs of pediatric vaccines (as defined 
    under section 2162 of the Public Health Service Act) \1\ is not 
    reduced below the coverage provided by the plan as of May 1, 1993, 
    and 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.
---------------------------------------------------------------------------
    \1\ See References in Text note below.
---------------------------------------------------------------------------

                      (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. If coverage under the plan is modified for any group 
        of similarly situated beneficiaries, the coverage shall also be 
        modified in the same manner for all individuals who are 
        qualified beneficiaries under the plan pursuant to this 
        subsection in connection with such group.

        (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:
            (i) Maximum required period

                (I) General rule for terminations and reduced 
                        hours

                    In the case of a qualifying event described in 
                paragraph (3)(B), except as provided in subclause (II), 
                the date which is 18 months after the date of the 
                qualifying event.
                (II) Special rule for multiple qualifying events

                    If a qualifying event (other than a qualifying event 
                described in paragraph (3)(F)) occurs during the 18 
                months after the date of a qualifying event described in 
                paragraph (3)(B), the date which is 36 months after the 
                date of the qualifying event described in paragraph 
                (3)(B).
                (III) Special rule for certain bankruptcy 
                        proceedings

                    In the case of a qualifying event described in 
                paragraph (3)(F) (relating to bankruptcy proceedings), 
                the date of the death of the covered employee or 
                qualified beneficiary (described in subsection 
                (g)(1)(D)(iii)), or in the case of the surviving spouse 
                or dependent children of the covered employee, 36 months 
                after the date of the death of the covered employee.
                (IV) General rule for other qualifying events

                    In the case of a qualifying event not described in 
                paragraph (3)(B) or (3)(F), the date which is 36 months 
                after the date of the qualifying event.
                (V) Medicare entitlement followed by qualifying 
                        event

                    In the case of a qualifying event described in 
                paragraph (3)(B) that occurs less than 18 months after 
                the date the covered employee became entitled to 
                benefits under title XVIII of the Social Security Act, 
                the period of coverage for qualified beneficiaries other 
                than the covered employee shall not terminate under this 
                clause before the close of the 36-month period beginning 
                on the date the covered employee became so entitled.

          In the case of a qualified beneficiary who is determined, 
            under title II or XVI of the Social Security Act, to have 
            been disabled at any time during the first 60 days of 
            continuation coverage under this section, any reference in 
            subclause (I) or (II) to 18 months is deemed a reference to 
            29 months (with respect to all qualified beneficiaries), but 
            only if the qualified beneficiary has provided notice of 
            such determination under paragraph (6)(C) before the end of 
            such 18 months.
            (ii) End of plan

                The date on which the employer ceases to provide any 
            group health plan to any employee.
            (iii) Failure to pay premium

                The date on which coverage ceases under the plan by 
            reason of a failure to make timely payment of any premium 
            required under the plan with respect to the qualified 
            beneficiary. The payment of any premium (other than any 
            payment referred to in the last sentence of subparagraph 
            (C)) shall be considered to be timely if made within 30 days 
            after the date due or within such longer period as applies 
            to or under the plan.
            (iv) Group health plan coverage or medicare 
                    entitlement

                The date on which the qualified beneficiary first 
            becomes, after the date of the election--
                    (I) covered under any other group health plan (as an 
                employee or otherwise) which does not contain any 
                exclusion or limitation with respect to any preexisting 
                condition of such beneficiary (other than such an 
                exclusion or limitation which does not apply to (or is 
                satisfied by) such beneficiary by reason of chapter 100 
                of this title, part 7 of subtitle B of title I of the 
                Employee Retirement Income Security Act of 1974, or 
                title XXVII of the Public Health Service Act), or
                    (II) in the case of a qualified beneficiary other 
                than a qualified beneficiary described in subsection 
                (g)(1)(D) entitled to benefits under title XVIII of the 
                Social Security Act.
            (v) Termination of extended coverage for disability

                In the case of a qualified beneficiary who is disabled 
            at any time during the first 60 days of continuation 
            coverage under this section, the month that begins more than 
            30 days after the date of the final determination under 
            title II or XVI of the Social Security Act that the 
            qualified beneficiary is no longer disabled.

        (C) Premium requirements

            The plan may require payment of a premium for any period of 
        continuation coverage, except that such premium--
                (i) shall not exceed 102 percent of the applicable 
            premium for such period, and
                (ii) may, at the election of the payor, be made in 
            monthly installments.

        In no event may the plan require the payment of any premium 
        before the day which is 45 days after the day on which the 
        qualified beneficiary made the initial election for continuation 
        coverage. In the case of an individual described in the last 
        sentence of subparagraph (B)(i), any reference in clause (i) of 
        this subparagraph to ``102 percent'' is deemed a reference to 
        ``150 percent'' for any month after the 18th month of 
        continuation coverage described in subclause (I) or (II) of 
        subparagraph (B)(i).

        (D) No requirement of insurability

            The coverage may not be conditioned upon, or discriminate on 
        the basis of lack of, evidence of insurability.

        (E) Conversion option

            In the case of a qualified beneficiary whose period of 
        continuation coverage expires under subparagraph (B)(i), the 
        plan must, during the 180-day period ending on such expiration 
        date, provide to the qualified beneficiary the option of 
        enrollment under a conversion health plan otherwise generally 
        available under the plan.

                        (3) Qualifying event

        For purposes of this subsection, the term ``qualifying event'' 
    means, with respect to any covered employee, any of the following 
    events which, but for the continuation coverage required under this 
    subsection, would result in the loss of coverage of a qualified 
    beneficiary--
            (A) The death of the covered employee.
            (B) The termination (other than by reason of such employee's 
        gross misconduct), or reduction of hours, of the covered 
        employee's employment.
            (C) The divorce or legal separation of the covered employee 
        from the employee's spouse.
            (D) The covered employee becoming entitled to benefits under 
        title XVIII of the Social Security Act.
            (E) A dependent child ceasing to be a dependent child under 
        the generally applicable requirements of the plan.
            (F) A proceeding in a case under title 11, United States 
        Code, commencing on or after July 1, 1986, with respect to the 
        employer from whose employment the covered employee retired at 
        any time.

    In the case of an event described in subparagraph (F), a loss of 
    coverage includes a substantial elimination of coverage with respect 
    to a qualified beneficiary described in subsection (g)(1)(D) within 
    one year before or after the date of commencement of the proceeding.

                       (4) Applicable premium

        For purposes of this subsection--

        (A) In general

            The term ``applicable premium'' means, with respect to any 
        period of continuation coverage of qualified beneficiaries, the 
        cost to the plan for such period of the coverage for similarly 
        situated beneficiaries with respect to whom a qualifying event 
        has not occurred (without regard to whether such cost is paid by 
        the employer or employee).

        (B) Special rule for self-insured plans

            To the extent that a plan is a self-insured plan--
            (i) In general

                Except as provided in clause (ii), the applicable 
            premium for any period of continuation coverage of qualified 
            beneficiaries shall be equal to a reasonable estimate of the 
            cost of providing coverage for such period for similarly 
            situated beneficiaries which--
                    (I) is determined on an actuarial basis, and
                    (II) takes into account such factors as the 
                Secretary may prescribe in regulations.
            (ii) Determination on basis of past cost

                If a plan administrator elects to have this clause 
            apply, the applicable premium for any period of continuation 
            coverage of qualified beneficiaries shall be equal to--
                    (I) the cost to the plan for similarly situated 
                beneficiaries for the same period occurring during the 
                preceding determination period under subparagraph (C), 
                adjusted by
                    (II) the percentage increase or decrease in the 
                implicit price deflator of the gross national product 
                (calculated by the Department of Commerce and published 
                in the Survey of Current Business) for the 12-month 
                period ending on the last day of the sixth month of such 
                preceding determination period.
            (iii) Clause (ii) not to apply where significant 
                    change

                A plan administrator may not elect to have clause (ii) 
            apply in any case in which there is any significant 
            difference between the determination period and the 
            preceding determination period, in coverage under, or in 
            employees covered by, the plan. The determination under the 
            preceding sentence for any determination period shall be 
            made at the same time as the determination under 
            subparagraph (C).

        (C) Determination period

            The determination of any applicable premium shall be made 
        for a period of 12 months and shall be made before the beginning 
        of such period.

                            (5) Election

        For purposes of this subsection--

        (A) Election period

            The term ``election period'' means the period which--
                (i) begins not later than the date on which coverage 
            terminates under the plan by reason of a qualifying event,
                (ii) is of at least 60 days' duration, and
                (iii) ends not earlier than 60 days after the later of--
                    (I) the date described in clause (i), or
                    (II) in the case of any qualified beneficiary who 
                receives notice under paragraph (6)(D), the date of such 
                notice.

        (B) Effect of election on other beneficiaries

            Except as otherwise specified in an election, any election 
        of continuation coverage by a qualified beneficiary described in 
        subparagraph (A)(i) or (B) of subsection (g)(1) shall be deemed 
        to include an election of continuation coverage on behalf of any 
        other qualified beneficiary who would lose coverage under the 
        plan by reason of the qualifying event. If there is a choice 
        among types of coverage under the plan, each qualified 
        beneficiary is entitled to make a separate selection among such 
        types of coverage.

                       (6) Notice requirement

        In accordance with regulations prescribed by the Secretary--
            (A) The group health plan shall provide, at the time of 
        commencement of coverage under the plan, written notice to each 
        covered employee and spouse of the employee (if any) of the 
        rights provided under this subsection.
            (B) The employer of an employee under a plan must notify the 
        plan administrator of a qualifying event described in 
        subparagraph (A), (B), (D), or (F) of paragraph (3) with respect 
        to such employee within 30 days (or, in the case of a group 
        health plan which is a multiemployer plan, such longer period of 
        time as may be provided in the terms of the plan) of the date of 
        the qualifying event.
            (C) Each covered employee or qualified beneficiary is 
        responsible for notifying the plan administrator of the 
        occurrence of any qualifying event described in subparagraph (C) 
        or (E) of paragraph (3) within 60 days after the date of the 
        qualifying event and each qualified beneficiary who is 
        determined, under title II or XVI of the Social Security Act, to 
        have been disabled at any time during the first 60 days of 
        continuation coverage under this section is responsible for 
        notifying the plan administrator of such determination within 60 
        days after the date of the determination and for notifying the 
        plan administrator within 30 days of the date of any final 
        determination under such title or titles that the qualified 
        beneficiary is no longer disabled.
            (D) The plan administrator shall notify--
                (i) in the case of a qualifying event described in 
            subparagraph (A), (B), (D), or (F) of paragraph (3), any 
            qualified beneficiary with respect to such event, and
                (ii) in the case of a qualifying event described in 
            subparagraph (C) or (E) of paragraph (3) where the covered 
            employee notifies the plan administrator under subparagraph 
            (C), any qualified beneficiary with respect to such event,

        of such beneficiary's rights under this subsection.

    The requirements of subparagraph (B) shall be considered satisfied 
    in the case of a multiemployer plan in connection with a qualifying 
    event described in paragraph (3)(B) if the plan provides that the 
    determination of the occurrence of such qualifying event will be 
    made by the plan administrator. For purposes of subparagraph (D), 
    any notification shall be made within 14 days (or, in the case of a 
    group health plan which is a multiemployer plan, such longer period 
    of time as may be provided in the terms of the plan) of the date on 
    which the plan administrator is notified under subparagraph (B) or 
    (C), whichever is applicable, and any such notification to an 
    individual who is a qualified beneficiary as the spouse of the 
    covered employee shall be treated as notification to all other 
    qualified beneficiaries residing with such spouse at the time such 
    notification is made.

                        (7) Covered employee

        For purposes of this subsection, the term ``covered employee'' 
    means an individual who is (or was) provided coverage under a group 
    health plan by virtue of the performance of services by the 
    individual for 1 or more persons maintaining the plan (including as 
    an employee defined in section 401(c)(1)).

             (8) Optional extension of required periods

        A group health plan shall not be treated as failing to meet the 
    requirements of this subsection solely because the plan provides 
    both--
            (A) that the period of extended coverage referred to in 
        paragraph (2)(B) commences with the date of the loss of 
        coverage, and
            (B) that the applicable notice period provided under 
        paragraph (6)(B) commences with the date of the loss of 
        coverage.

(g) Definitions

    For purposes of this section--

                      (1) Qualified beneficiary

        (A) In general

            The term ``qualified beneficiary'' means, with respect to a 
        covered employee under a group health plan, any other individual 
        who, on the day before the qualifying event for that employee, 
        is a beneficiary under the plan--
                (i) as the spouse of the covered employee, or
                (ii) as the dependent child of the employee.

        Such term shall also include a child who is born to or placed 
        for adoption with the covered employee during the period of 
        continuation coverage under this section.

        (B) Special rule for terminations and reduced employment

            In the case of a qualifying event described in subsection 
        (f)(3)(B), the term ``qualified beneficiary'' includes the 
        covered employee.

        (C) Exception for nonresident aliens

            Notwithstanding subparagraphs (A) and (B), the term 
        ``qualified beneficiary'' does not include an individual whose 
        status as a covered employee is attributable to a period in 
        which such individual was a nonresident alien who received no 
        earned income (within the meaning of section 911(d)(2)) from the 
        employer which constituted income from sources within the United 
        States (within the meaning of section 861(a)(3)). If an 
        individual is not a qualified beneficiary pursuant to the 
        previous sentence, a spouse or dependent child of such 
        individual shall not be considered a qualified beneficiary by 
        virtue of the relationship of the individual.

        (D) Special rule for retirees and widows

            In the case of a qualifying event described in subsection 
        (f)(3)(F), the term ``qualified beneficiary'' includes a covered 
        employee who had retired on or before the date of substantial 
        elimination of coverage and any other individual who, on the day 
        before such qualifying event, is a beneficiary under the plan--
                (i) as the spouse of the covered employee,
                (ii) as the dependent child of the covered employee, or
                (iii) as the surviving spouse of the covered employee.

                        (2) Group health plan

        The term ``group health plan'' has the meaning given such term 
    by section 5000(b)(1). Such term shall not include any plan 
    substantially all of the coverage under which is for qualified long-
    term care services (as defined in section 7702B(c)).

                       (3) Plan administrator

        The term ``plan administrator'' has the meaning given the term 
    ``administrator'' by section 3(16)(A) of the Employee Retirement 
    Income Security Act of 1974.

                           (4) Correction

        A failure of a group health plan to meet the requirements of 
    subsection (f) with respect to any qualified beneficiary shall be 
    treated as corrected if--
            (A) such failure is retroactively undone to the extent 
        possible, and
            (B) the qualified beneficiary is placed in a financial 
        position which is as good as such beneficiary would have been in 
        had such failure not occurred.

    For purposes of applying subparagraph (B), the qualified beneficiary 
    shall be treated as if he had elected the most favorable coverage in 
    light of the expenses he incurred since the failure first occurred.

(Added Pub. L. 100-647, title III, Sec. 3011(a), Nov. 10, 1988, 102 
Stat. 3616; amended Pub. L. 101-239, title VI, Secs. 6202(b)(3)(B), 
6701(a)-(c), title VII, Secs. 7862(c)(2)(B), (3)(C), (4)(B), (5)(A), 
7891(d)(1)(B), (2)(A), Dec. 19, 1989, 103 Stat. 2233, 2294, 2295, 2432, 
2433, 2446; Pub. L. 101-508, title XI, Sec. 11702(f), Nov. 5, 1990, 104 
Stat. 1388-515; Pub. L. 103-66, title XIII, Sec. 13422(a), Aug. 10, 
1993, 107 Stat. 566; Pub. L. 104-188, title I, Sec. 1704(g)(1)(A), 
(t)(21), Aug. 20, 1996, 110 Stat. 1880, 1888; Pub. L. 104-191, title 
III, Sec. 321(d)(1), title IV, Sec. 421(c), Aug. 21, 1996, 110 Stat. 
2058, 2088.)

                       References in Text

    The Public Health Service Act, referred to in subsec. (f)(1), does 
not contain a section 2162. The reference probably should be to section 
1928 of the Social Security Act, which is classified to section 1396s of 
Title 42, The Public Health and Welfare, and which relates to pediatric 
vaccines.
    The Social Security Act, referred to in subsec. (f)(2)(B)(i)(IV), 
(V), (iv)(II), (v), (3)(D), (6)(C), is act Aug. 14, 1935, ch. 531, 49 
Stat. 620, as amended. Titles II, XVI, and XVIII of the Social Security 
Act are classified generally to subchapters II (Sec. 401 et seq.), XVI 
(Sec. 1381 et seq.), and XVIII (Sec. 1395 et seq.), respectively, of 
chapter 7 of Title 42. For complete classification of this Act to the 
Code, see section 1305 of Title 42 and Tables.
    The Employee Retirement Income Security Act of 1974, referred to in 
subsecs. (f)(2)(B)(iv)(I) and (g)(3), is Pub. L. 93-406, Sept. 2, 1974, 
88 Stat. 832, as amended. Part 7 of subtitle B of title I of the Act is 
classified generally to part 7 (Sec. 1181 et seq.) of subtitle B of 
subchapter I of chapter 18 of Title 29, Labor. Section 3(16)(A) of the 
Act is classified to section 1002(16)(A) of Title 29. For complete 
classification of this Act to the Code, see Short Title note set out 
under section 1001 of Title 29 and Tables.
    The Public Health Service Act, referred to in subsec. 
(f)(2)(B)(iv)(I), is act July 1, 1944, ch. 373, 58 Stat. 682, as 
amended. Title XXVII of the Act is classified generally to subchapter 
XXV (Sec. 300gg et seq.) of chapter 6A of Title 42, The Public Health 
and Welfare. For complete classification of this Act to the Code, see 
Short Title note set out under section 201 of Title 42 and Tables.


                               Amendments

    1996--Subsec. (f)(2)(B)(i). Pub. L. 104-191, Sec. 421(c)(1)(A), in 
concluding provisions, substituted ``at any time during the first 60 
days of continuation coverage under this section'' for ``at the time of 
a qualifying event described in paragraph (3)(B)'', struck out ``with 
respect to such event'' after ``(II) to 18 months'', and inserted 
``(with respect to all qualified beneficiaries)'' after ``29 months''.
    Pub. L. 104-188, Sec. 1704(t)(21), made technical amendment to 
directory language of Pub. L. 101-239, Sec. 6701(a)(1). See 1989 
Amendment note below.
    Subsec. (f)(2)(B)(i)(V). Pub. L. 104-188, Sec. 1704(g)(1)(A), 
substituted ``Medicare entitlement followed by qualifying event'' for 
``Qualifying event involving medicare entitlement'' in heading and 
amended text generally. Prior to amendment, text read as follows: ``In 
the case of an event described in paragraph (3)(D) (without regard to 
whether such event is a qualifying event), the period of coverage for 
qualified beneficiaries other than the covered employee for such event 
or any subsequent qualifying event shall not terminate before the close 
of the 36-month period beginning on the date the covered employee 
becomes entitled to benefits under title XVIII of the Social Security 
Act.''
    Subsec. (f)(2)(B)(iv)(I). Pub. L. 104-191, Sec. 421(c)(1)(B), 
inserted ``(other than such an exclusion or limitation which does not 
apply to (or is satisfied by) such beneficiary by reason of chapter 100 
of this title, part 7 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974, or title XXVII of the Public 
Health Service Act)'' before ``, or''.
    Subsec. (f)(2)(B)(v). Pub. L. 104-191, Sec. 421(c)(1)(C), 
substituted ``at any time during the first 60 days of continuation 
coverage under this section'' for ``at the time of a qualifying event 
described in paragraph (3)(B)''.
    Subsec. (f)(6)(C). Pub. L. 104-191, Sec. 421(c)(2), substituted ``at 
any time during the first 60 days of continuation coverage under this 
section'' for ``at the time of a qualifying event described in paragraph 
(3)(B)''.
    Subsec. (g)(1)(A). Pub. L. 104-191, Sec. 421(c)(3), inserted at end 
``Such term shall also include a child who is born to or placed for 
adoption with the covered employee during the period of continuation 
coverage under this section.''
    Subsec. (g)(2). Pub. L. 104-191, Sec. 321(d)(1), inserted at end 
``Such term shall not include any plan substantially all of the coverage 
under which is for qualified long-term care services (as defined in 
section 7702B(c)).''
    1993--Subsec. (f)(1). Pub. L. 103-66 inserted ``the coverage of the 
costs of pediatric vaccines (as defined under section 2162 of the Public 
Health Service Act) is not reduced below the coverage provided by the 
plan as of May 1, 1993, and only if'' after ``only if''.
    1990--Subsec. (d)(1). Pub. L. 101-508 amended par. (1) generally. 
Prior to amendment, par. (1) read as follows: ``any failure of a group 
health plan to meet the requirements of subsection (f) if all employers 
maintaining such plan normally employed fewer than 20 employees on a 
typical business day during the preceding calendar year,''.
    1989--Subsec. (f)(2)(B)(i). Pub. L. 101-239, Sec. 6701(a)(1), as 
amended by Pub. L. 104-188, Sec. 1704(t)(21), inserted at end ``In the 
case of a qualified beneficiary who is determined, under title II or XVI 
of the Social Security Act, to have been disabled at the time of a 
qualifying event described in paragraph (3)(B), any reference in 
subclause (I) or (II) to 18 months with respect to such event is deemed 
a reference to 29 months, but only if the qualified beneficiary has 
provided notice of such determination under paragraph (6)(C) before the 
end of such 18 months.''
    Subsec. (f)(2)(B)(i)(V). Pub. L. 101-239, Sec. 7862(c)(5)(A), added 
subcl. (V).
    Subsec. (f)(2)(B)(iv). Pub. L. 101-239, Sec. 7862(c)(3)(C), 
substituted ``entitlement'' for ``eligibility'' in heading and inserted 
``which does not contain any exclusion or limitation with respect to any 
preexisting condition of such beneficiary'' after ``or otherwise)'' in 
subcl. (I).
    Subsec. (f)(2)(B)(v). Pub. L. 101-239, Sec. 6701(a)(2), added cl. 
(v).
    Subsec. (f)(2)(C). Pub. L. 101-239, Sec. 7862(c)(4)(B), amended last 
sentence generally. Prior to amendment, last sentence read as follows: 
``If an election is made after the qualifying event, the plan shall 
permit payment for continuation coverage during the period preceding the 
election to be made within 45 days of the date of the election.''
    Pub. L. 101-239, Sec. 6701(b), inserted at end ``In the case of an 
individual described in the last sentence of subparagraph (B)(i), any 
reference in clause (i) of this subparagraph to `102 percent' is deemed 
a reference to `150 percent' for any month after the 18th month of 
continuation coverage described in subclause (I) or (II) of subparagraph 
(B)(i).''
    Subsec. (f)(6). Pub. L. 101-239, Sec. 7891(d)(1)(B)(ii), inserted 
after and below subpar. (D) the following new flush sentence ``The 
requirements of subparagraph (B) shall be considered satisfied in the 
case of a multiemployer plan in connection with a qualifying event 
described in paragraph (3)(B) if the plan provides that the 
determination of the occurrence of such qualifying event will be made by 
the plan administrator.''
    Pub. L. 101-239, Sec. 7891(d)(1)(B)(i)(II), inserted ``(or, in the 
case of a group health plan which is a multiemployer plan, such longer 
period of time as may be provided in the terms of the plan)'' after ``14 
days'' in last sentence.
    Subsec. (f)(6)(B). Pub. L. 101-239, Sec. 7891(d)(1)(B)(i)(I), 
inserted ``(or, in the case of a group health plan which is a 
multiemployer plan, such longer period of time as may be provided in the 
terms of the plan)'' after ``30 days''.
    Subsec. (f)(6)(C). Pub. L. 101-239, Sec. 6701(c), inserted before 
period at end ``and each qualified beneficiary who is determined, under 
title II or XVI of the Social Security Act, to have been disabled at the 
time of a qualifying event described in paragraph (3)(B) is responsible 
for notifying the plan administrator of such determination within 60 
days after the date of the determination and for notifying the plan 
administrator within 30 days of the date of any final determination 
under such title or titles that the qualified beneficiary is no longer 
disabled''.
    Subsec. (f)(7). Pub. L. 101-239, Sec. 7862(c)(2)(B), substituted 
``the performance of services by the individual for 1 or more persons 
maintaining the plan (including as an employee defined in section 
401(c)(1))'' for ``the individual's employment or previous employment 
with an employer''.
    Subsec. (f)(8). Pub. L. 101-239, Sec. 7891(d)(2)(A), added par. (8).
    Subsec. (g)(2). Pub. L. 101-239, Sec. 6202(b)(3)(B), substituted 
``section 5000(b)(1)'' for ``section 162(i)''.


                    Effective Date of 1996 Amendments

    Amendment by section 321(d)(1) of Pub. L. 104-191 applicable to 
contracts issued after Dec. 31, 1996, see section 321(f) of Pub. L. 104-
191, set out as an Effective Date note under section 7702B of this 
title.
    Section 421(d) of Pub. L. 104-191 provided that: ``The amendments 
made by this section [amending this section, sections 1162, 1166, and 
1167 of Title 29, Labor, and sections 300bb-2, 300bb-6, and 300bb-8 of 
Title 42, The Public Health and Welfare] shall become effective on 
January 1, 1997, regardless of whether the qualifying event occurred 
before, on, or after such date.''
    Section 1704(g)(2) of Pub. L. 104-188 provided that: ``The 
amendments made by this subsection [amending this section, section 1162 
of Title 29, Labor, and section 300bb-2 of Title 42, The Public Health 
and Welfare] shall apply to plan years beginning after December 31, 
1989.''


                    Effective Date of 1993 Amendment

    Section 13422(b) of Pub. L. 103-66 provided that: ``The amendment 
made by subsection (a) [amending this section] shall apply with respect 
to plan years beginning after the date of the enactment of this Act 
[Aug. 10, 1993].''


                    Effective Date of 1990 Amendment

    Amendment by Pub. L. 101-508 effective as if included in the 
provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. 
L. 100-647, to which such amendment relates, see section 11702(j) of 
Pub. L. 101-508, set out as a note under section 59 of this title.


                    Effective Date of 1989 Amendment

    Amendment by section 6202(b)(3)(B) of Pub. L. 101-239 applicable to 
items and services furnished after Dec. 19, 1989, see section 6202(b)(5) 
of Pub. L. 101-239, set out as a note under section 162 of this title.
    Section 6701(d) of Pub. L. 101-239 provided that: ``The amendments 
made by this section [amending this section] shall apply to plan years 
beginning on or after the date of the enactment of this Act [Dec. 19, 
1989], regardless of whether the qualifying event occurred before, on, 
or after such date.''
    Section 7862(c)(2)(C) of Pub. L. 101-239 provided that: ``The 
amendments made by this paragraph [amending this section and section 
1167 of Title 29, Labor] shall apply to plan years beginning after 
December 31, 1989.''
    Amendment by section 7862(c)(3)(C) of Pub. L. 101-239 applicable to 
(i) qualifying events occurring after Dec. 31, 1989, and (ii) in the 
case of qualified beneficiaries who elected continuation coverage after 
Dec. 31, 1988, the period for which the required premium was paid (or 
was attempted to be paid but was rejected as such), see section 
7862(c)(3)(D) of Pub. L. 101-239, set out as a note under section 162 of 
this title.
    Section 7862(c)(4)(C) of Pub. L. 101-239 provided that: ``The 
amendments made by this paragraph [amending this section and section 
1162 of Title 29, Labor] shall apply to plan years beginning after 
December 31, 1989.''
    Section 7862(c)(5)(C) of Pub. L. 101-239 provided that: ``The 
amendments made by this paragraph [amending this section and section 
1162 of Title 29] shall apply to plan years beginning after December 31, 
1989.''
    Section 7891(d)(1)(C) of Pub. L. 101-239 provided that: ``The 
amendments made by this paragraph [amending this section and section 
1166 of Title 29] shall apply with respect to plan years beginning on or 
after January 1, 1990.''
    Section 7891(d)(2)(C) of Pub. L. 101-239 provided that: ``The 
amendments made by this paragraph [amending this section and section 
1167 of Title 29] shall apply with respect to plan years beginning on or 
after January 1, 1990.''


                             Effective Date

    Section applicable to taxable years beginning after Dec. 31, 1988, 
but not applicable to any plan for any plan year to which section 162(k) 
of this title (as in effect on the day before Nov. 10, 1988) did not 
apply by reason of section 10001(e)(2) of Pub. L. 99-272, see section 
3011(d) of Pub. L. 100-647, set out as an Effective Date of 1988 
Amendment note under section 162 of this title.


            Notification of Changes in Continuation Coverage

    Section 421(e) of Pub. L. 104-191 provided that: ``Not later than 
November 1, 1996, each group health plan (covered under title XXII of 
the Public Health Service Act [42 U.S.C. 300bb-1 et seq.], part 6 of 
subtitle B of title I of the Employee Retirement Income Security Act of 
1974 [29 U.S.C. 1161 et seq.], and section 4980B(f) of the Internal 
Revenue Code of 1986) shall notify each qualified beneficiary who has 
elected continuation coverage under such title, part or section of the 
amendments made by this section [amending this section, sections 1162, 
1166, and 1167 of Title 29, Labor, and sections 300bb-2, 300bb-6, and 
300bb-8 of Title 42, The Public Health and Welfare].''

                  Section Referred to in Other Sections

    This section is referred to in sections 51A, 106, 414, 9707, 9832 of 
this title; title 29 section 1191b; title 38 section 4317; title 42 
sections 300gg-91, 1396a, 1396e.
