IRS Issues First Guidance on Nonprofit CO-OP Health Insurers

The IRS issued its first guidance on the requirements for new qualified nonprofit health insurance issuers under IRC § 501(c)(29) and has requested comments on specific issues (Notice 2011-23). The notice clarifies that the IRS is not yet accepting applications for recognition of tax-exempt status under section 501(c)(29) and will not accept applications until it has issued further guidance. In addition, qualified nonprofit health insurance issuers cannot offer a health plan in a state until that state has in effect certain health insurance market reforms mandated by last year’s health care legislation.