Internal Revenue Bulletin 2015-14 (PDF rendition): IRS Revenue Rulings

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HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Rev. Rul. 2015–7, page 849.
Federal rates; adjusted federal rates; adjusted federal long-
term rate and the long-term exempt rate. For purposes of
sections 382, 642, 1274, 1288, and other sections of the
Code, tables set forth the rates for April 2015.
Rev. Proc. 2015–25, page 848.
Guidance is provided to individuals who fail to meet the eligi-
bility requirements of section 911(d)(1) of the Internal Revenue
Code because adverse conditions in a foreign country preclude
the individual from meeting those requirements. A current list
of countries for tax year 2014 and the dates those countries
are subject to the section 911(d)(4) waiver is provided.
EMPLOYEE PLANS
Notice 2015–28, page 848.
This notice extends the temporary nondiscrimination relief pre-
viously established in Notice 2014 –54 for certain closed de-
fined benefit pension plans (i.e., defined benefit plans that
provide ongoing accruals but that have been amended to limit
those accruals to some or all of the employees who partici-
pated in the plan on a specified date) for an additional year by
applying the relief to plan years beginning before 2017 if the
conditions of Notice 2014 –54 are satisfied.
T.D. 9714, page 831.
This document contains final rules that amend the regulations
regarding excepted benefits under the Employee Retirement
Income Security Act of 1974, the Internal Revenue Code, and
the Public Health Service Act related to limited wraparound
coverage. Excepted benefits are generally exempt from the
requirements that were added to those laws by the Health
Insurance Portability and Accountability Act and the Patient
Protection and Affordable Care Act.
EXCISE TAX
Notice 2015–17, page 845.
Notice 2015–17 provides transition relief from the assessment
of excise tax under section 4980D for small employers (in
particular, employers who are not applicable large employers)
who reimburse or pay a premium for an individual health insur-
ance policy for an employee. Notice 2015–17 also addresses
the treatment for federal tax and for market reform purposes
of arrangements reimbursing premiums of 2%-shareholder em-
ployees of S corporations. Finally, Notice 2015–17 addresses
application of the market reforms to certain employer arrange-
ments to fund Medicare premium payments or to provide a
TRICARE-related health reimbursement arrangement (HRA).
T.D. 9714, page 831.
This document contains final rules that amend the regulations
regarding excepted benefits under the Employee Retirement
Income Security Act of 1974, the Internal Revenue Code, and
the Public Health Service Act related to limited wraparound
coverage. Excepted benefits are generally exempt from the
requirements that were added to those laws by the Health
Insurance Portability and Accountability Act and the Patient
Protection and Affordable Care Act.
Finding Lists begin on page ii.
Bulletin No. 2015–14
April 6, 2015

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and en-
force the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all
substantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of internal
management are not published; however, statements of inter-
nal practices and procedures that affect the rights and duties
of taxpayers are published.
Revenue rulings represent the conclusions of the Service on
the application of the law to the pivotal facts stated in the
revenue ruling. In those based on positions taken in rulings to
taxpayers or technical advice to Service field offices, identify-
ing details and information of a confidential nature are deleted
to prevent unwarranted invasions of privacy and to comply with
statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions of
the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A, Tax
Conventions and Other Related Items, and Subpart B, Legisla-
tion and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Sec-
retary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index for
the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
April 6, 2015Bulletin No. 2015–14

Part I. Rulings and Decisions Under the Internal Revenue Code
of 1986
T.D. 9714
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 54
DEPARTMENT OF LABOR
29 CFR Part 2590
Employee Benefits Security
Administration
DEPARTMENT OF HEALTH
AND HUMAN SERVICES
45 CFR Part 146
Amendments to Excepted
Benefits
AGENCIES:Internal Revenue Service,
Department of the Treasury; Employee
Benefits Security Administration, Depart-
ment of Labor; Centers for Medicare &
Medicaid Services, Department of Health
and Human Services.
ACTION:Final rules.
SUMMARY: This document contains fi-
nal regulations that amend the regulations
regarding excepted benefits under the Em-
ployee Retirement Income Security Act of
1974, the Internal Revenue Code, and the
Public Health Service Act to specify re-
quirements for limited wraparound cover-
age to qualify as an excepted benefit. Ex-
cepted benefits are generally exempt from
the requirements that were added to those
laws by the Health Insurance Portability
and Accountability Act and the Afford-
able Care Act.
DATES:These final regulations are ef-
fective on May 18, 2015.
FOR FURTHER INFORMATION
CONTACT:Amy Turner or Elizabeth
Schumacher, Employee Benefits Security
Administration, Department of Labor, at
(202) 693-8335 (not a toll-free number);
Karen Levin, Internal Revenue Service,
Department of the Treasury, at (202) 317-
5500 (not a toll-free number); Jacob Ack-
erman, Centers for Medicare & Medicaid
Services, Department of Health and Hu-
man Services, at (410) 786-1565. (not a
toll-free number).
Customer Service Information:Indi-
viduals interested in obtaining informa-
tion from the Department of Labor con-
cerning employment-based health
coverage laws, may call the EBSA Toll-
Free Hotline at 1-866-444-EBSA (3272)
or visit the Department of Labor’s website
(http://www.dol.gov/ebsa). In addition, in-
formation from HHS on private health
insurance for consumers can be found on
the Centers for Medicare & Medicaid Ser-
vices (CMS) website (www.cms.gov/
cciio) and information on health reform
can be found atwww.HealthCare.gov.
SUPPLEMENTARY
INFORMATION:
I. Background
The Health Insurance Portability and
Accountability Act of 1996 (HIPAA),
Public Law 104–191, 110 Stat. 1936
added title XXVII of the Public Health
Service Act (PHS Act), part 7 of the Em-
ployee Retirement Income Security Act of
1974 (ERISA), and chapter 100 of the
Internal Revenue Code (the Code), pro-
viding portability and nondiscrimination
provisions with respect to health cover-
age. These provisions of the PHS Act,
ERISA, and the Code were later aug-
mented by other consumer protection
laws, including the Mental Health Parity
Act of 1996,
1
the Mental Health Parity
and Addiction Equity Act of 2008,
2
the
Newborns’ and Mothers’ Health Protec-
tion Act,
3
the Women’s Health and Can-
cer Rights Act,
4
the Genetic Information
Nondiscrimination Act of 2008,
5
the Chil-
dren’s Health Insurance Program Reau-
thorization Act of 2009,
6
Michelle’s
Law,
7
and the Affordable Care Act.
8
The Affordable Care Act reorganizes,
amends, and adds to the provisions of part
A of title XXVII of the PHS Act relating
to group health plans and health insurance
issuers in the group and individual mar-
kets. The term “group health plan” in-
cludes both insured and self-insured group
health plans.
9
Section 715(a)(1) of ERISA
and section 9815(a)(1) of the Code, as
added by the Affordable Care Act, incor-
porate the provisions of part A of title
XXVII of the PHS Act into ERISA and
the Code to make them applicable to
group health plans and health insurance
issuers providing health insurance cover-
age in connection with group health plans.
The PHS Act sections incorporated by
these references are sections 2701 through
2728.
Sections 2722 and 2763 of the PHS
Act, section 732 of ERISA, and section
9831 of the Code provide that the require-
ments of title XXVII of the PHS Act, part
7 of ERISA, and chapter 100 of the Code,
respectively, generally do not apply to
1
Pub. L. 104–204, 110 Stat. 2944 (September 26, 1996).
2
Pub. L. 110–343, 122 Stat. 3881 (October 3, 2008).
3
Pub. L. 104–204, 110 Stat. 2935 (September 26, 1996).
4
Pub. L. 105–277, 112 Stat. 2681–436 (October 21, 1998).
5
Pub. L. 110–233, 122 Stat. 881 (May 21, 2008).
6
Pub. L. 111–3, 123 Stat. 65 (February 4, 2009).
7
Pub. L. 110–381, 122 Stat. 4081 (October 9, 2008).
8
The Patient Protection and Affordable Care Act, Public Law 111–148, was enacted on March 23, 2010, and the Health Care and Education Reconciliation Act, Public Law 111–152, was
enacted on March 30, 2010. (These statutes are collectively known as the “Affordable Care Act”.)
9
The term “group health plan” is used in title XXVII of the PHS Act, part 7 of ERISA, and chapter 100 of the Code, and is distinct from the term “health plan,”as used in other provisions
of title I of the Affordable Care Act. The term “health plan” does not include self-insured group health plans.
Bulletin No. 2015–14April 6, 2015
831

excepted benefits. Excepted benefits are
described in section 2791 of the PHS Act,
section 733 of ERISA, and section 9832
of the Code.
The parallel statutory provisions estab-
lish four categories of excepted benefits.
The first category includes benefits that
are generally not health coverage
10
(such
as automobile insurance, liability insur-
ance, workers compensation, and acciden-
tal death and dismemberment coverage).
The benefits in this category are excepted
in all circumstances. Incontrast, the bene-
fits in the second, third, and fourth catego-
ries are types of health coverage but are
excepted only if certain conditions are met.
The second category of excepted ben-
efits is limited excepted benefits, which
may include limited scope vision or dental
benefits, and benefits for long-term care,
nursing home care, home health care, or
community based care. Section
2791(c)(2)(C) of the PHS Act, section
733(c)(2)(C) of ERISA, and section
9832(c)(2)(C) of the Code authorize the
Secretaries of Health and Human Services
(HHS), Labor, and the Treasury (collec-
tively, the Secretaries) to issue regulations
establishing other, similar limited benefits
as excepted benefits. The Secretaries ex-
ercised this authority previously with re-
spect to certain health flexible spending
arrangements (health FSAs).
11
To be ex-
cepted under this second category, the
statute (specifically, ERISA section
732(c)(1), PHS Act section 2722(c)(1),
and Code section 9831(c)(1)) provides
that limited benefits must either: (1) be
provided under a separate policy, certifi-
cate, or contract of insurance; or (2) oth-
erwise not be an integral part of a group
health plan, whether insured or self-
insured.
12
The third category of excepted bene-
fits, referred to as “noncoordinated ex-
cepted benefits,” includes both coverage
for only a specified disease or illness
(such as cancer-only policies), and hospi-
tal indemnity or other fixed indemnity in-
surance. In the group market, these bene-
fits are excepted only if all of the
following conditions are met: (1) the ben-
efits are provided under a separate policy,
certificate, or contract of insurance; (2)
there is no coordination between the pro-
vision of such benefits and any exclusion
of benefits under any group health plan
maintained by the same plan sponsor; and
(3) the benefits are paid with respect to
any event without regard to whether ben-
efits are provided under any group health
plan maintained by the same plan spon-
sor.
13
The fourth category of excepted bene-
fits is supplemental excepted benefits.
14
Such benefits must be: (1) coverage sup-
plemental to Medicare, coverage supple-
mental to the Civilian Health and Medical
Program of the Department of Veterans
Affairs (CHAMPVA) or to Tricare, or
similar coverage that is supplemental to
coverage provided under a group health
plan; and (2) provided under a separate
policy, certificate, or contract of insur-
ance.
15
In 2004, the Departments of the Trea-
sury, Labor, and HHS published final reg-
ulations with respect to excepted benefits
(the HIPAA regulations).
16
(Subsequent
references to the “Departments” include
all three Departments, unless the headings
or context indicate otherwise.)
On December 24, 2013, the Depart-
ments published additional proposed reg-
ulations with respect to the second cate-
gory of excepted benefits, limited
excepted benefits (2013 proposed regula-
tions).
17
The 2013 proposed regulations
proposed to: (1) eliminate the requirement
that participants in self-insured plans pay
an additional premium or contribution for
limited-scope vision or dental benefits to
qualify as benefits that are not an integral
part of the plan; (2) set forth the criteria
under which employee assistance pro-
grams (EAPs) that do not provide signif-
icant benefits in the nature of medical care
constitute excepted benefits; and (3) allow
plan sponsors in certain limited circum-
stances to offer, as excepted benefits, cov-
erage that wraps around certain individual
health insurance coverage. The intent of
limited wraparound coverage is to permit
employers to provide certain employees,
dependents, and retirees who are enrolled
in some type of individual market cover-
age with overall coverage that is generally
comparable to the coverage provided un-
der the employers’ group health plan,
without eroding employer-sponsored cov-
erage.
After consideration of comments re-
ceived on the 2013 proposed regulations,
the Departments published final regula-
tions regarding dental and vision benefits
and EAP benefits on October 1, 2014
(2014 final regulations).
18
In the 2014 fi-
nal regulations, the Departments also
stated their intent to publish regulations
that addressed limited wraparound cover-
age in the future, taking into account the
extensive comments received on this is-
10
See 62 FR 16894, 16903 (Apr. 8, 1997), which states that these benefits are generally not health insurance coverage.
11
26 CFR 54.9831–1(c)(3)(v); 29 CFR 2590.732(c)(3)(v); 45 CFR 146.145(b)(3)(v).
12
See the discussion in the 2014 final regulations concerning the application of these requirements to benefits such as limited-scope dental and vision benefits and employee assistance
programs at 79 FR 59131 (Oct. 1, 2014).
13
26 CFR 54.9831–1(c)(4); 29 CFR 2590.732(c)(4); 45 CFR 146.145(b)(4).See alsoQ7 in Affordable Care Act Implementation FAQs Part XI, available athttp://www.dol.gov/ebsa/faqs/
faq-aca11.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs11.html.
14
On February 13, 2015, the Departments issued guidance to clarify whether insurance coverage that supplements group health coverage by providing additional categories of benefits (and
does not also fill gaps in group health plan coverage for cost-sharing obligations, such as coinsurance or deductibles) can be characterized as an excepted benefit.SeeAffordable Care Act
Implementation FAQs Part XXIII, available athttp://www.dol.gov/ebsa/faqs/faq-aca23.htmlandhttp://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/Supplmental-
FAQ_2-13-15-final.pdf.
15
26 CFR 54.9831–1(c)(5); 29 CFR 2590.732(c)(5); 45 CFR 146.145(b)(5). The Departments issued additional guidance regarding supplemental health insurance coverage as excepted
benefits.SeeEBSA Field Assistance Bulletin No. 2007–04 (available athttp://www.dol.gov/ebsa/pdf/fab2007-4.pdf); CMS Insurance Standards Bulletin 08–01 (available athttp://
www.cms.gov/CCIIO/Resources/Files/Downloads/hipaa_08_01_508.pdf); and IRS Notice 2008–23 (available athttp://www.irs.gov/irb/2008-07_IRB/ar09.html).
16
69 FR 78720 (Dec. 30, 2004).
17
78 FR 77632.(Dec. 23, 2014).
18
79 FR 59131 (Oct. 1, 2014).
April 6, 2015Bulletin No. 2015–14
832

sue.
19
After consideration of comments on
the 2013 proposed regulations, on Decem-
ber 23, 2014, the Departments published
new proposed regulations with respect to
limited wraparound coverage (2014 pro-
posed regulations), which set forth five
requirements under which limited benefits
provided through a group health plan that
wrap around either eligible individual in-
surance or coverage under a Multi-State
Plan would constitute excepted benefits.
20
A description of the 2014 proposed regu-
lations is set forth below, together with a
summary of the comments received on the
2014 proposed regulations and an over-
view of these final regulations.
II. Overview of the Final Regulations
Under the 2014 proposed regulations,
limited benefits provided through a group
health plan that wrap around either (1)
eligible individual health insurance, or (2)
coverage under a Multi-State Plan (collec-
tively referred to as “limited wraparound
coverage”) could constitute excepted ben-
efits, if five requirements were met. For
this purpose, the 2014 proposed regula-
tions defined “eligible individual health
insurance” as individual health insurance
coverage that is not a grandfathered health
plan,
21
not a transitional individual health
insurance market plan,
22
and does not
consist solely of excepted benefits. The
preamble to the 2014 proposed regula-
tions acknowledged that, in States that
elect to establish a Basic Health Program
(BHP), certain low-income individuals
(for example, those with household in-
come between 133 percent and 200 per-
cent of the Federal poverty level) who
would otherwise qualify for a tax credit to
obtain a qualified health plan through an
Exchange would instead be enrolled in
coverage through the BHP. The Depart-
ments invited comments on how an em-
ployer might make wraparound coverage
available to BHP enrollees.
23
Comments addressing the BHP all sup-
ported permitting wraparound of BHP
coverage. The Departments agree and,
therefore, these final regulations permit
limited wraparound coverage of BHP cov-
erage in the same manner as limited wrap-
around coverage of eligible individual
health insurance.
A.Covers additional benefits
The 2014 proposed regulations stated
that limited wraparound coverage would
have to be specifically designed to wrap
around eligible individual health insur-
ance or Multi-State Plan coverage. That
is, the limited wraparound coverage
would have to provide meaningful bene-
fits beyond coverage of cost sharing under
the eligible individual health insurance or
Multi-State Plan coverage. The preamble
to the 2014 proposed regulations provided
examples, such as that limited wraparound
coverage could provide coverage for ex-
panded in-network medical clinics or pro-
viders, or provide benefits that are not
essential health benefits (EHBs) and that
are not covered under the eligible individ-
ual health insurance.
24
The preamble to
the 2014 proposed regulations also pro-
vided that limited wraparound coverage
would not be permitted to provide benefits
solely under a coordination-of-benefits
provision and could not be an account-
based reimbursement arrangement.
25
Limited wraparound coverage that covers
solely cost sharing would not be permis-
sible, as stated in the preamble to the 2014
proposed regulations, because reduced
cost sharing can be obtained by choosing
an individual health insurance policy with
a higher actuarial value (for example, a
platinum plan with a 90 percent actuarial
value).
26
The Departments invited com-
ment on safe harbors standardizing the
benefits in the limited wraparound cover-
age that could be established.
Many commenters requested addi-
tional clarity on the type of benefits that
could be offered as meaningful benefits in
limited wraparound coverage. Sugges-
tions included reimbursement for the full
cost of primary care, the cost of prescrip-
tion drugs not on the formulary of the
primary plan, ten physician visits per year,
services considered to be provided out-of-
network by the primary plan, access to
onsite clinics or specific health facilities at
no cost, or benefits targeted to a specific
population (such as coverage for certain
orthopedic injuries), home health cover-
age, or coverage of other benefits that are
not covered EHBs under the primary plan.
The Departments consider all of these ex-
amples to qualify as additional, meaning-
ful benefits under this first requirement to
be limited wraparound coverage that qual-
ifies as excepted benefits. As discussed
further below, the Departments reiterate
that limited wraparound coverage that is
an excepted benefit cannot be an account-
based mechanism and instead must be a
risk-sharing product that covers a defined
package of services.
B.Limited in amount
For the second requirement to be lim-
ited wraparound coverage that qualifies as
excepted benefits, the Departments pro-
posed that the limited wraparound cover-
age be limited in amount. Specifically, the
2014 proposed regulations provided that
the annual cost of coverage per employee
(and any covered dependents) under the
limited wraparound coverage could not
exceed the maximum annual contribution
for health FSAs (which was $2,500 in
2014), indexed in the manner prescribed
under Code section 125(i)(2) (which
amounts to $2,550 for 2015), and the cost
of coverage would include both employer
19
79 FR 59131 (Oct. 1, 2014).
20
79 FR 76931 (Dec. 23, 2014).
21
Seesection 1251 of the Affordable Care Act, 29 CFR 2590.715–1251, and 45 CFR 147.140.
22
As described in CMS Insurance Standards Bulletin (March 5, 2014) available at:http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/transition-to-compliant-
policies-03-06-2015.pdf.
23
79 FR 76935, footnote 32.
24
79 FR 76935
25
79 FR 76936
26
Id.
Bulletin No. 2015–14April 6, 2015
833

and employee contributions towards cov-
erage and be determined in the same man-
ner as the applicable premium is calcu-
lated under a COBRA continuation
provision. The preamble to the 2014 pro-
posed regulations stated that the bright-
line limitation was intended to be simpler
to administer than a cap of 15 percent of
the cost of the plan sponsor’s primary
coverage as set forth in the 2013 proposed
regulations.
Many comments stated that the limits
on the amount should be higher so that
individuals eligible for the limited wrap-
around coverage would not experience
gaps in coverage. Some commenters sug-
gested that the Departments consider an
alternative, referencing the higher health
savings account (HSA) limits, which are
$3,350 for individual coverage and $6,650
for families in 2015, indexed annually.
Others suggested the Departments set the
limit as the greater of: the maximum per-
mitted annual salary reduction towards a
health FSA (as was set forth in the 2014
proposed regulations), or a percentage of
the cost of coverage under the primary
plan (as was set forth in the 2013 pro-
posed regulations).
These final regulations adopt the last
suggestion. Either the dollar or percent
limitation would satisfy the Departments’
objective of ensuring that the limited
wraparound coverage provides a limited
benefit, as required by the statute, and be
similar to other limited excepted benefits
(that is, dental benefits, vision benefits,
long term care, nursing home care, home
health care, community-based care, or
health FSAs as described in 26 CFR
54.9831–1(c)(3); 29 CFR 2590.732(c)(3);
45 CFR 146.145(b)(3)). The percentage,
as in the 2013 proposed regulations, is 15
percent of the cost of coverage under the
primary plan.
The final regulations do not adopt the
suggestion to use much higher limits on
the cost of coverage (for example, the
HSA limits). Too large a benefit that is not
limited in scope (c.f., limited-scope dental
and vision excepted benefits) would not
constitute a “similar, limited benefit” un-
der ERISA section 733(c)(2), PHS Act
section 2791(c)(2), or Code section
9832(c)(2).
The Departments also received re-
quests for clarification regarding the ad-
ministration of the second requirement
(that is, that the limited wraparound cov-
erage be limited in amount). Some com-
ments requested that the determination of
the cost of coverage be permitted to be
made on an aggregate basis in advance of
each plan year by an actuary, and not
based on actual experience of the group or
any individual during the plan year. This
approach is precisely the approach that
was intended by the Departments. As
stated earlier, to qualify as excepted ben-
efits, the limited wraparound coverage
could not be an account-based reimburse-
ment arrangement. That is, the coverage
must include a risk-sharing element. As
such, making a determination regarding
the cost of coverage must occur on an
aggregate basis. Moreover, to the extent
this determination for a given plan year is
made on sound actuarial principles that
are appropriately documented, the actual
experience of the group or any individual
during the plan year would not be a factor
in determining the cost of coverage for
that plan year (although it could impact
future years by providing additional infor-
mation on which the actuarial estimate of
the cost of coverage for future years
would be based). The final regulations
include this clarification.
C.Nondiscrimination
Under the 2014 proposed regulations,
the third requirement for limited wrap-
around coverage to qualify as excepted
benefits related to nondiscrimination. Spe-
cifically, the Departments proposed three
sub-requirements relating to nondiscrimi-
nation. First, the wraparound coverage
could not impose any preexisting condi-
tion exclusion, consistent with the require-
ments of section 2704 of the PHS Act (as
incorporated into section 715 of ERISA
and section 9815 of the Code) and imple-
menting regulations.
27
Second, the wrap-
around coverage could not discriminate
against individuals in eligibility, benefits,
or premiums based on any health factor of
an individual (or any dependent of the
individual), consistent with the require-
ments of section 702 of ERISA, section
9802 of the Code, and section 2705 of the
PHS Act (as incorporated into section 715
of ERISA and section 9815 of the Code)
and implementing regulations.
28
Finally,
neither the primary group health plan cov-
erage nor the limited wraparound cover-
age could fail to comply with section 2716
of the PHS Act (as incorporated into sec-
tion 715 of ERISA and section 9815 of the
Code) or fail to be excludible from in-
come with respect to any individual due to
the application of section 105(h) of the
Code (as applicable). These final regula-
tions adopt the approach outlined in the
2014 proposed regulations.
The Departments received two com-
ments on this third requirement. One com-
menter inquired as to the potential inter-
action between excepted benefits and the
excise tax on high cost employer-
sponsored health coverage under Code
section 4980I. The Treasury and the IRS
issued Notice 2015–16 on February 23,
2015 describing potential approaches with
regard to a number of issues under Code
section 4980I and inviting comments by
May 15, 2015. Issues relating to Code
section 4980I will be addressed as part of
that rulemaking. Another commenter re-
quested that the Departments consider
“modernizing” the nondiscrimination pro-
visions under Code section 105(h) and
section 2716 of the PHS Act relating to
prohibiting discrimination in favor of
highly compensated employees. The De-
partments are considering this suggestion
and other comments previously received
for purposes of future guidance relating to
these provisions.
D.Plan eligibility requirements
The fourth requirement to qualify as
excepted benefits concerned plan eligibil-
ity requirements. First, under the 2014
proposed regulations, individuals eligible
27
29 CFR 2590.715–2704 and 45 CFR 147.108.See alsoQ2 in Affordable Care Act Implementation FAQs Part XXII, available athttp://www.dol.gov/ebsa/faqs/faq-aca22.htmland
http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/FAQs-Part-XXII-FINAL.pdfregarding the prohibition against offering employees with high claims risk a choice
between enrollment in its standard group health plan or cash.
28
26 CFR 54.9802–1, 29 CFR 2590.702, and 45 CFR 146.121.
April 6, 2015Bulletin No. 2015–14
834

for the limited wraparound coverage
could not be enrolled in excepted benefit
coverage that is a health FSA. One com-
menter suggested permitting dual enroll-
ment in limited wraparound coverage and
health FSA coverage. However, as de-
scribed earlier, the Departments are using
their discretion under ERISA section
733(c)(2), PHS Act section 2791(c)(2),
and Code section 9832(c)(2) to define
“other similar, limited benefits” as ex-
cepted benefits and do not adopt this sug-
gestion. To ensure that wraparound cov-
erage is a limited benefit, like health
FSAs, the Departments do not intend to
allow plan sponsors to combine multiple
excepted benefits into an arrangement that
functions as a material substitute for pri-
mary group health plan coverage and still
be exempt from the health market reforms.
Under the 2014 proposed regulations, as
part of the fourth requirement for limited
wraparound coverage to constitute excepted
benefits, coverage would be required to
comply with one of two alternative sets of
standards relating to eligibility and benefits:
one set of plan eligibility requirements for
wraparound benefits offered in conjunction
with eligible individual health insurance (or
BHP coverage) for persons who are not
full-time employees, and a separate set of
standards for coverage that wraps around
certain Multi-State Plan coverage. As de-
scribed further below, limited wraparound
coverage for persons who are not full-time
employees is intended for employers that
are generally offering affordable, minimum
value coverage to their full-time workers but
want to offer an additional limited benefit to
their part-time workers. Limited wrap-
around coverage offered in conjunction with
a Multi-State Plan is intended for employers
that were offering reasonably comprehen-
sive coverage prior to the promulgation of
these final rules, and wish to offer limited
wraparound coverage while still contribut-
ing roughly the same total amount toward
their employees’ health benefits.
1.Limited wraparound coverage offered
in conjunction with eligible individual
health insurance (or BHP coverage) for
persons who are not full-time employees
As under the 2014 proposed regula-
tions, limited coverage that wraps around
eligible individual health insurance (or
BHP coverage) for an individual who is
not a full-time employee is required to
satisfy three standards relating to plan el-
igibility.
i.Employer obligations with respect to
full-time employees
First, for each year that wraparound
coverage is offered, the employer that is
the sponsor of the plan offering wrap-
around coverage, or the employer partici-
pating in a plan offering wraparound cov-
erage, must offer to its full-time
employees coverage that: (1) is substan-
tially similar to coverage that the em-
ployer would need to offer to its full-time
employees in order not to be subject to a
potential assessable payment under the
employer shared responsibility provisions
of section 4980H(a) of the Code, if such
provisions were applicable (that is, sub-
stantially similar to an offer of minimum
essential coverage (as defined in Code
section 5000A(f)) to at least 95 percent of
its full-time employees (or to all but five
of its full-time employees, if five is greater
than five percent of its full-time employ-
ees)); (2) provides minimum value (as de-
fined in section 36B(c)(2)(C)(ii) of the
Code); and (3) is reasonably expected to
be affordable (permitting use of the safe
harbor rules for determining affordability
set forth in 26 CFR 54.4980H–5(e)(2)).
The preamble to the 2014 proposed regu-
lations stated that, if a plan or issuer pro-
viding limited wraparound coverage takes
reasonable steps to ensure that employers
disclose necessary information regarding
their coverage offered and affordability
information to the plan or issuer, the plan
or issuer could rely on reasonable repre-
sentations by employers regarding this in-
formation, unless the plan or issuer has
specific knowledge to the contrary.
Several commenters requested that, in
the context of small employers and mul-
tiemployer plans, there be an exemption
from the requirement that, to be consid-
ered excepted benefits, the employer offer
to its full-time employees coverage that is
substantially similar to coverage that the
employer would need to offer pursuant to
Code section 4980H(a). However, these
final excepted benefits regulations are de-
signed to allow plan sponsors an option to
offer additional workers health coverage
comparable to that which they already of-
fer, rather than to serve as a substitute for
primary coverage.
Other commenters asked the Depart-
ments to clarify that any Code section
4980H–related requirements are met in
instances in which the employer has no
full-time employees. These final regula-
tions clarify that, in the event that the
employer has no full-time employees, but
the plan covers retirees (and their depen-
dents), or covers part-time employees
(and their dependents), the requirements
to provide coverage that is substantially
similar to coverage that the employer
would need to offer to its full-time em-
ployees in order not to be subject to a
potential assessable payment section
4980H(a) of the Code, that provides min-
imum value, and that is reasonably ex-
pected to be affordable, are all considered
satisfied.
ii.Limited eligibility
Second, eligibility for the limited
wraparound coverage must be limited to
employees who are not full-time employ-
ees (and their dependents), or who are
retirees (and their dependents). In the pre-
amble to the 2014 proposed regulations,
the Departments stated that “full-time em-
ployees” would be employees who are
reasonably expected to work at least an
average of 30 hours per week. Plans and
issuers would not be required to define
“full-time employees” strictly in accor-
dance with the rules of Code section
4980H, but employers could rely on the
Code section 4980H definition, or any rea-
sonable interpretation of who is reason-
ably expected to work an average of 30
hours a week, for purposes of this provi-
sion. The Departments invited comment
on this approach.
Some commenters argued that plan
sponsors should be able to offer limited
coverage that wraps around eligible indi-
vidual health insurance to full-time em-
ployees. The Departments do not adopt
this change. A rationale for treating the
wraparound coverage as an excepted ben-
efit is that recipients will be able to use
this limited type of coverage in conjunc-
tion with individual coverage purchased
through an Exchange without being dis-
qualified from claiming the premium tax
Bulletin No. 2015–14April 6, 2015
835

credit. This may be attractive to employ-
ers as a means of providing some health
coverage to employees who may not oth-
erwise have been offered coverage, such
as part-time employees or retirees. How-
ever, this is not intended to incentivize or
permit employers to fail to offer minimum
essential coverage to full-time employees,
a population to whom employers have
typically offered coverage.
One commenter sought clarification
that plan sponsors offering limited wrap-
around coverage may rely on a determi-
nation of full-time employee status at the
time of enrollment. The Departments
agree that employers offering limited
wraparound coverage will make determi-
nations based on the expected status of an
employee in the future as a part-time em-
ployee versus full-time employee. Ac-
cordingly, the final regulations include a
clarification that this standard is met if it is
reasonably determined at the time of en-
rollment that the employee will on aver-
age work fewer than 30 hours per week
during the plan year. Moreover, for pur-
poses of administering the premium tax
credit under section 36B of the Code, if it
is reasonably determined at the time of
enrollment that the employee will on av-
erage work fewer than 30 hours per week
during the plan year and therefore the
employee is offered limited coverage that
wraps around eligible individual health
insurance, but the employee later during
the coverage period meets the definition
of a full-time employee, the coverage will
not fail to be excepted benefits and the
employee will not become ineligible for
premium tax credits for the remainder of
the plan year solely because the original
reasonable determination proves incor-
rect. Whether, to be reasonable, that de-
termination would need to be changed for
future plan years will depend on all the
facts and circumstances.
Several commenters sought clarifica-
tion regarding the definition of “depen-
dent.” Specifically, commenters asked
whether the term “dependent” includes
“spouses” (as the term is defined under 26
CFR 54.9801–2, 29 CFR 2590.701–2, and
45 CFR 144.103 for purposes of chapter
100 of the Code, part 7 of ERISA, and
title XXVII of the PHS Act), or whether it
is limited to “dependent children” (as the
term is defined under Code section 4980H
and its implementing regulations). These
final regulations clarify that, for purposes
of excepted benefits, the term “dependent”
is defined by reference to the definitions
section governing the market reforms
(that is, 26 CFR 54.9801–2, 29 CFR
2590.701–2, and 45 CFR 144.103) and
not the employer shared responsibility
provisions under Code section 4980H and
its implementing regulations. Accord-
ingly, spouses may qualify as dependents
to the extent they are eligible for coverage
under the terms of the limited wraparound
coverage. Moreover, some commenters
sought clarification as to whether a plan
could permit enrollment of a spouse ben-
eficiary without enrollment of an em-
ployee participant. While nothing in these
final regulations, nor any other provision
of ERISA, the Code, or the PHS Act re-
quires plans to enroll spouse beneficiaries
for coverage (other than COBRA cover-
age) if the participant does not enroll,
nothing in these provisions prohibits plans
from enrolling such a spouse if plans
choose to do so.
29
iii.Offer of other group health plan
coverage
Third, under the 2014 proposed regu-
lations, other group health plan coverage,
not limited to excepted benefits, would be
required to be offered to the individuals
eligible for the wraparound coverage.
Only individuals eligible for other group
health plan coverage could be eligible for
the wraparound coverage.
Some commenters contended that plan
sponsors should not be required to offer
other group health plan coverage to indi-
viduals who are not full-time employees.
This provision does not require employers
to offer group health plan coverage to
workers who are not full-time employees
but it does limit the ability to offer the
wrap-around coverage only to workers
otherwise eligible for other group health
plan coverage. That is because this provi-
sion is not intended to create an opportu-
nity or incentive for employers to discon-
tinue providing group health plan
coverage and to encourage its employees
to obtain coverage through the Exchange
subsidized through the premium tax credit
while still receiving meaningful
employer-provided health benefits. Fur-
ther, the same standard is applied in order
for a health FSA to be an excepted benefit,
and this provision in the final regulation is
intended to allow employers to offer a
limited benefit, similar to a health FSA.
2.Limited wraparound coverage offered
in conjunction with Multi-State Plan
coverage
For limited coverage that wraps around
Multi-State Plan coverage, four require-
ments would be required to be met under
the 2014 proposed regulations.
i.OPM review and approval
The first of the four standards would
require that the limited wraparound cov-
erage be specifically designed and ap-
proved by the Office of Personnel Man-
agement (OPM) to provide benefits in
conjunction with coverage under a Multi-
State Plan authorized under section 1334
of the Affordable Care Act. Several com-
ments sought clarification as to whether
OPM would be designing limited wrap-
around coverage, or whether that would
more appropriately be the role of the plan
sponsor or health insurance issuer. These
final rules include a modification to clarify
that OPM would not design limited wrap-
around coverage. Instead, OPM’s role
would be to review and approve such cov-
erage. Moreover, as indicated in the pre-
amble to the 2014 proposed regulations,
with respect to the maintenance of effort
standard (discussed below), OPM’s role is
to ensure that group health plans and
health insurance issuers offering Multi-
State Plan wraparound coverage have a
reasonable process in place for assuring
employers meet the criteria set forth in
these regulations for excepted benefits.
ii.Maintenance of effort
The 2014 proposed regulations pro-
vided that the employer would have had to
29
SeeERISA section 601, Code section 4980B and PHS Act section 2201, which requires enrollment of qualified beneficiaries (including spouses) after a loss of coverage in connection
with a qualifying event.
April 6, 2015Bulletin No. 2015–14
836

offer coverage in the plan year that began
in 2014 that is substantially similar to
coverage that the employer would need to
have offered to its full-time employees in
order to not be subject to an assessable
payment under the employer shared re-
sponsibility provisions of section
4980H(a) of the Code, if such provisions
had been applicable. In addition, in the
plan year that began in 2014, the employer
would have had to have offered coverage
to a substantial portion of full-time em-
ployees that provided “minimum value”
(as defined in section 36B(c)(2)(C)(ii) of
the Code) and was affordable (applying
the safe harbor rules for determining af-
fordability set forth in 26 CFR 54.4980H–
5(e)(2)). Finally, for the duration of the
pilot program (described later in this pre-
amble), the employer’s annual aggregate
contributions for both primary and limited
wraparound coverage must be substan-
tially the same as the employer’s aggre-
gate contributions for coverage offered to
full-time employees in 2014. The Depart-
ments stated in the preamble that they
were considering interpreting this “sub-
stantially the same” condition as a per-
centage (for example, 80 or 90 percent)
and potentially applying it on a per-
worker basis to allow for fluctuations in
an employer’s workforce.
Citing that some employers may have
made changes to their coverage in 2014
because Exchange coverage was first
available in 2014, several commenters re-
quested that plan sponsors be permitted to
use either 2013 or 2014 as the base year
for this maintenance of effort requirement
set forth in these second and third require-
ments for limited coverage that wraps
around Multi-State Plan coverage. These
final regulations adopt this suggestion.
Other comments stated that an employ-
er’s annual aggregate contribution toward
primary and limited wraparound coverage
should include any assessable payments
under Code section 4980H owed by the
employer. An applicable large employer
may become subject to an assessable pay-
ment if it fails to offer minimum essential
coverage to its full-time employees and
one or more of those employees obtains a
premium tax credit, or it fails to provide a
full-time employee minimum essential
coverage that provides minimum value
and is affordable for that employee and
that employee obtains a premium tax
credit. In neither case does the payment of
an assessable payment provide coverage
to the employee or otherwise assist that
employee in obtaining coverage. Nor does
the fact that the failure to provide cover-
age may permit the employee to obtain the
premium tax credit mean that the resulting
fee is contributing toward that employee’s
health coverage. The final regulations,
therefore, do not make this change.
Some comments sought clarification
regarding whether the employer’s annual
aggregate contributions for both primary
and limited wraparound coverage must be
substantially the same as the employer’s
aggregate contributions for coverage of-
fered to full-time employees in 2013 or
2014. Some requested OPM be given dis-
cretion to determine whether the mainte-
nance of effort standard has been met by
each employer. Others requested a thresh-
old of 60 percent in determining whether
this standard has been met. Many factors,
including fluctuations in workforce size,
cost of coverage, and employer contribu-
tions towards other fringe benefits may
affect employer contributions from year to
year. The final regulations retain the stan-
dard set forth in the 2014 proposed regu-
lations that the employer’s annual aggre-
gate contributions for both primary and
limited wraparound coverage must be
substantially the same as the employer’s
aggregate contributions for coverage of-
fered to full-time employees in 2014 (or
2013). For this purpose, the Departments
consider this “substantially the same”
condition to be met if contributions were
at least 80 percent of contributions made
in 2013 or 2014, applied on an average,
full-time worker basis (to allow for fluc-
tuations in an employer’s workforce).
OPM may make a finding, based on all the
facts and circumstances, that other em-
ployer contribution arrangements also
meet this standard. OPM may provide ad-
ditional guidance (such as examples and
safe harbors) in the future.
As with coverage that wraps around
eligible individual health insurance (or
that wraps around Basic Health Plan cov-
erage), commenters asked the Depart-
ments to clarify that any Code section
4980H–related requirements are met in
instances in which the employer has no
full-time employees. These final regula-
tions adopt a parallel clarification for cov-
erage that wraps around Multi-State Plan
coverage as for coverage that wraps
around eligible individual health insur-
ance (or that wraps around Basic Health
Plan coverage). That is, while these final
regulations do not permit new employers
to provide wraparound coverage as an ex-
cepted benefit, these final regulations clar-
ify that, in the event that the employer has
no full-time employees, but the plan cov-
ers retirees (and their dependents), or cov-
ers part-time employees (and their depen-
dents), the requirements that, in the plan
year that began in 2013 or 2014, the em-
ployer would have had to have offered
coverage to a substantial portion of full-
time employees that provided minimum
value and was affordable is met, as is the
requirement that, for the duration of the
pilot program, the employer’s annual ag-
gregate contributions for both primary and
limited wraparound coverage must be
substantially the same as the employer’s
aggregate contributions for coverage of-
fered to full-time employees in 2013 or
2014.
For purposes of administering this pro-
vision with respect to limited wraparound
coverage offered in conjunction with
Multi-State Plan coverage, the Depart-
ments had proposed that the term “full-
time employee” means a “full-time em-
ployee” as defined in 26 CFR 54.4980H–
1(a)(21) who is not in a limited non-
assessment period for certain employees
(as defined in 26 CFR 54.4980H–
1(a)(26)). Moreover, if a plan or issuer
providing limited wraparound coverage
takes reasonable steps to ensure that em-
ployers disclose necessary information re-
garding their coverage offered and contri-
bution levels for 2013 or 2014 to the plan
or issuer, the plan or issuer may rely on
reasonable representations by employers
regarding this information, unless the plan
or issuer has specific knowledge to the
contrary. Consistent with the reporting
and evaluation criteria described later in
this preamble, the Departments stated that
OPM may verify that plans and issuers
have reasonable mechanisms in place to
ensure that contributing employers meet
these standards.
Bulletin No. 2015–14April 6, 2015
837

E.Reporting
The fifth and final requirement for lim-
ited wraparound coverage to qualify as
excepted benefits under the 2014 pro-
posed regulations is a reporting require-
ment, for group health plans and group
health insurance issuers, as well as group
health plan sponsors. The final regulations
adopt the approach outlined in the 2014
proposed regulations.
A self-insured group health plan, or a
health insurance issuer offering or propos-
ing to offer Multi-State Plan wraparound
coverage, would report to OPM, in a form
and manner specified in OPM guidance,
information OPM reasonably requires to
determine whether the plan or issuer qual-
ifies to offer such coverage or complies
with the applicable requirements of this
section.
In addition, the plan sponsor of any
group health plan offering any type of
limited wraparound coverage would re-
port to HHS, in a form and manner spec-
ified in guidance, information HHS rea-
sonably requires to determine whether the
exception for limited wraparound cover-
age is allowing plan sponsors to provide
workers with comparable benefits whether
enrolled in minimum essential coverage
under a group health plan offered by the
plan sponsor, or enrolled in eligible indi-
vidual health insurance, BHP coverage, or
Multi-State Plan coverage, with additional
limited wraparound coverage offered by
the plan sponsor, without causing an ero-
sion of coverage.
Commenters requested that there be
coordination of any reporting require-
ments with existing reporting require-
ments and some made specific sugges-
tions regarding data elements that should
be required for reporting. The Depart-
ments agree with the principle of non-
duplication and will seek comment on any
new reporting requirements through the
process established by Paperwork Reduc-
tion Act of 1995.
F.Pilot Program With Sunset Date
Under the 2014 proposed regulations,
limited wraparound coverage would be
permitted under a pilot program for a lim-
ited time. Specifically, this type of wrap-
around coverage could be offered as ex-
cepted benefits if it is first offered no later
than December 31, 2017, and ends on the
later of: (1) the date that is three years
after the date wraparound coverage is first
offered; or (2) the date on which the last
collective bargaining agreement relating
to the plan terminates after the date wrap-
around coverage is first offered (deter-
mined without regard to any extension
agreed to after the date the wraparound
coverage is first offered). The 2014 pro-
posed regulations invited comments on
this time frame for applicability, including
whether the Departments should have the
option to provide for an earlier termina-
tion date.
Many commenters cited uncertainty
and the lack of lead time as negatively
impacting full utilization of the pilot pro-
gram and requested a longer implementa-
tion period. The Departments agree that
the timing for publication of these final
rules makes 2015 plan year implementa-
tion impossible or impracticable for most
plans. Accordingly, these final rules spec-
ify that wraparound coverage could be
offered as excepted benefits if the cover-
age is first offered no earlier than January
1, 2016 and no later than December 31,
2018. The end date is unchanged from the
proposal, that is the later of: (1) the date
that is three years after the date wrap-
around coverage is first offered; or (2) the
date on which the last collective bargain-
ing agreement relating to the plan termi-
nates after the date wraparound coverage
is first offered (determined without regard
to any extension agreed to after the date
the wraparound coverage is first offered).
III. Economic Impact and Paperwork
Burden
A.Summary
As discussed in detail above, these reg-
ulations amend the definition of “limited
excepted benefits” in the group market to
provide plan sponsors with two options to
offer limited wraparound coverage to cer-
tain individuals. Under the first option, a
plan sponsor could offer limited benefits
provided through a group health plan that
wraps around eligible individual health
insurance to employees who are not full-
time employees (and their dependents), or
who are retirees (and their dependents).
For this purpose, full-time employees are
employees who are reasonably expected
to work at least an average of 30 hours per
week. Under the second option, the lim-
ited wraparound coverage that satisfies the
requirements outlined in the regulations
must be approved by OPM and be offered
in conjunction with Multi-State Plan cov-
erage authorized under section 1334 of the
Affordable Care Act. Under the first op-
tion, the limited benefits would also be
permitted to wrap around the Basic Health
Program authorized under section 1331 of
the Affordable Care Act.
B.Executive Orders 12866 and 13563—
Departments of Labor and HHS
Executive Orders 12866 and 13563 di-
rect agencies to assess all costs and ben-
efits of available regulatory alternatives
and, if regulation is necessary, to select
regulatory approaches that maximize net
benefits (including potential economic,
environmental, and public health and
safety effects; distributive impacts; and
equity). Executive Order 13563 empha-
sizes the importance of quantifying both
costs and benefits, reducing costs, harmo-
nizing rules, and promoting flexibility.
Section 3(f) of Executive Order 12866
defines a “significant regulatory action” as
an action that is likely to result in a reg-
ulation: (1) having an annual effect on the
economy of $100 million or more in any
one year, or adversely and materially af-
fecting a sector of the economy, produc-
tivity, competition, jobs, the environment,
public health or safety, or state, local, or
tribal governments or communities (also
referred to as “economically significant”);
(2) creating a serious inconsistency or oth-
erwise interfering with an action taken or
planned by another agency; (3) materially
altering the budgetary impacts of entitle-
ment grants, user fees, or loan programs
or the rights and obligations of recipients
thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the
President’s priorities, or the principles set
forth in the Executive Order. OMB has
determined that the action is significant
within the meaning of section 3(f)(4) of
Executive Order 12866, and the Depart-
ments accordingly provide the following
assessment of its potential benefits and
costs.
April 6, 2015Bulletin No. 2015–14
838

The Departments recognize that many
plan sponsors provide comprehensive
health benefits to their workers. One ob-
jective of the Affordable Care Act is to
allow individuals with comprehensive
health insurance plans to maintain their
current level of benefits. Some employers
are interested in offering wraparound cov-
erage to employees who are enrolled in a
Multi-State Plan authorized under section
1334 of the Affordable Care Act or to
part-time employees. These regulations
provide two options to employers that
clarify the circumstances under which
plan sponsors can provide to their em-
ployees such limited wraparound cover-
age that qualifies as an excepted benefit.
The cost (and Federal budget impact
30
)
of these final regulations is difficult to
quantify. The Departments solicited com-
ments in the regulatory impact analysis
section of the preamble to the 2014 pro-
posed regulations. Comments were in-
vited generally and on specific questions,
including: To what degree, if any, might
this regulation increase employers’ pro-
pensity to provide health insurance? To
what extent, if any, this proposed regula-
tion could affect plan sponsors’ decision
making? Are there any particular sectors
of the economy in which employers will
be more or less inclined to pursue wrap-
around coverage programs?
Comments were also invited on the
effects of the proposal and the Depart-
ments requested detailed data that would
inform the following questions: What will
be the impact of limiting the cost of the
wraparound coverage to $2,500 per em-
ployee (and any covered dependents)?
How many employers offer coverage that
provides minimum value and is affordable
for a substantial portion (under the first
option) or 95 percent (under the second
option) of employees who are eligible for
coverage? To what extent would premi-
ums for comprehensive health coverage
change in the presence and absence of this
rule?
No specific data were received in re-
sponse to this solicitation, although sev-
eral commented that limited conditions
under which wraparound coverage could
be offered were overly restrictive and
made it of limited use. Others commented
that the uncertainty of the life span of a
time-limited pilot program would mini-
mize uptake of the offering of limited
wraparound coverage.
These final regulations generally im-
plement the 2014 proposed regulations
with marginal change, as discussed above.
Both options are designed so that wrap-
around coverage could not replace
employer-sponsored primary group cover-
age. Under the individual health insurance
wraparound option, the employer also
must offer other group health coverage
that is not limited to excepted benefits and
provides minimum value to the class of
participants offered the wraparound cov-
erage by reason of their employment.
Only individuals who are not full-time
employees and who are eligible for other
group health plan coverage may be eligi-
ble for the wraparound coverage.Also, the
employer coverage must substantially sat-
isfy the employer shared responsibility pro-
visions of Code section 4980H(a), and the
coverage would have to be affordable for at
least 95 percent of full-time employees.
Under the Multi-State Plan wrap-
around option, the employer would have
to offer coverage in the plan year begin-
ning in 2013 or 2014 that would have
substantially satisfied the employer shared
responsibility provisions of Code section
4980H(a) if the provision had been appli-
cable, provided minimum value, and been
affordable for a substantial portion of its
full-time employees.
31
The employer’s an-
nual contributions for both its primary and
wraparound coverage must be substantial.
The final regulations permit limited
wraparound coverage to be excepted ben-
efits if initially offered between January 1,
2016 and December 31, 2018, and con-
tinuing for the longer of three years or the
date on which the last collective bargain-
ing agreement relating to the group health
plan terminates. In addition, the maximum
benefit cannot exceed the greater of the
annual health FSA contribution limit
($2,550 for 2015), indexed; or 15 percent
of the firm’s primary plan cost. In the
2014 proposed regulations the maximum
benefit was the annual health FSA contri-
bution limits ($2,550 for 2015), indexed.
As with the 2014 proposed regulations,
the decision to offer the limited wrap-
around coverage remains optional. There
is greater administrative complexity asso-
ciated with the wraparound coverage than
primary coverage alone or primary cover-
age plus a health FSA which offers similar
benefits. Given a choice, some plan spon-
sors may choose to increase the afford-
ability of their primary coverage rather
than offer limited wraparound coverage.
Some plan sponsors may not have that
choice: the employers may not be in a
financial position to make their primary
health plans affordable to more workers,
let alone contribute to wraparound cover-
age. Employers may also continue to sim-
ply not provide employees with afford-
able, minimum value coverage, allowing
their workers to purchase coverage and
potentially qualify for premium tax credits
through an Exchange with no additional
wraparound benefit, and these employers
would continue to make any employer
shared responsibility payments as applica-
ble, resulting in no additional cost to the
employer or the Federal government.
The option to offer limited wraparound
coverage would not encumber any cur-
rently existing means by which employers
can provide comprehensive health insur-
ance coverage to their employees in com-
pliance with the Affordable Care Act.
Rather, it would clarify two additional,
alternative means of doing so.
For the foregoing reasons, the Depart-
ments have reached the conclusion that
the impact of the benefits, costs, and trans-
fers will be limited. The Departments do
not expect many plans to offer limited
wraparound coverage, and will monitor
usage and impact during the pilot program
through reporting, as discussed above.
30
As with other group health coverage, employer contributions to the limited wraparound coverage would be excluded from employee income for tax purposes. Similar to the cost of the
proposal, the budget implications of adding limited wraparound coverage as a form of excepted benefits depends on the number of employers that elect either option and the number of
employees that in turn receive it.
31
The substantial level was included to help minimize the implications for the primary plan’s risk pool by preventing a large number of low-wage workersfrom leaving the primary plan
for Exchange coverage.
Bulletin No. 2015–14April 6, 2015
839

C.Paperwork Reduction Act—
Department of Labor and Department of
the Treasury
These final regulations are not subject
to the requirements of the Paperwork Re-
duction Act of 1995 (PRA 95) (44 U.S.C.
section 3501 et seq.), because it does not
contain a collection of information as de-
fined in 44 U.S.C. section 3502(3).
D.Paperwork Reduction Act—
Department of HHS
The final rule is not subject to the re-
quirements of the Paperwork Reduction
Act of 1995 (PRA 95) (44 U.S.C. section
3501 et seq.), because it does not contain
a collection of information as defined in
44 U.S.C. section 3502(3). An analysis
under the PRA will be conducted in the
future for any future guidance establishing
a collection of information related to the
rule.
E.Regulatory Flexibility Act—
Departments of Labor and HHS
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) (RFA) imposes certain
requirements with respect to Federal rules
that are subject to the notice and comment
requirements of section 553(b) of the Ad-
ministrative Procedure Act (5 U.S.C. 551
et seq.) and that are likely to have a sig-
nificant economic impact on a substantial
number of small entities. Unless an
agency certifies that a proposed rule is not
likely to have a significant economic im-
pact on a substantial number of small en-
tities, section 603 of RFA requires that the
agency present an initial regulatory flexi-
bility analysis at the time of the publica-
tion of the notice of proposed rulemaking
describing the impact of the rule on small
entities and seeking public comment on
such impact. Small entities include small
businesses, organizations and governmen-
tal jurisdictions.
For purposes of the RFA, the Depart-
ments continue to consider a “small en-
tity” to be an employee benefit plan with
fewer than 100 participants. The basis for
this definition is found in section
104(a)(2) of the act, which permits the
Secretary of Labor to prescribe simplified
annual reports for pension plans that cover
fewer than 100 participants. Pursuant to
the authority of section 104(a)(3), the De-
partment has previously issued at 29 CFR
2520.104–20, 2520.104–21, 2520.104–
41, 2520.104–46 and 2520.104b–10 cer-
tain simplified reporting provisions and
limited exemptions from reporting and
disclosure requirements for small plans,
including unfunded or insured welfare
plans covering fewer than 100 participants
and satisfying certain other requirements.
Further, while some large employers
may have small plans, in general small
employers maintain most small plans.
Thus, the Departments believe that assess-
ing the impact of these final regulations on
small plans is an appropriate substitute for
evaluating the effect on small entities. The
definition of small entity considered ap-
propriate for this purpose differs, how-
ever, from a definition of small business
that is based on size standards promul-
gated by the Small Business Administra-
tion (13 CFR 121.201) pursuant to the
Small Business Act (15 U.S.C. 631 et
seq.). The Departments requested com-
ment on the appropriateness of the size
standard at the proposed rule phase and
received no responses.
Because these final regulations impose
no additional costs on employers or plans,
the Departments believe that they do not
have a significant economic impact on a
substantial number of small entities. Ac-
cordingly, pursuant to section 605(b) of
the RFA, the Departments hereby certify
that these final regulations will not have a
significant economic impact on a substan-
tial number of small entities.
F.Special Analyses—Department of the
Treasury
For purposes of the Department of the
Treasury it has been determined that this
final rule is not a significant regulatory
action as defined in Executive Order
12866, as supplemented by Executive Or-
der 13563. Therefore, a regulatory assess-
ment is not required. It has also been
determined that section 553(b) of the Ad-
ministrative Procedure Act (5 U.S.C.
chapter 5) does not apply to these final
regulations, and, because these final reg-
ulations do not impose a collection of
information on small entities, an analysis
under the RFA is not required. Pursuant to
section 7805(f) of the Code, the notice of
proposed rulemaking preceding these final
regulations was submitted to the Small
Business Administration for comment on
its impact on small business.
G.Unfunded Mandates Reform Act
For purposes of the Unfunded Man-
dates Reform Act of 1995 (2 U.S.C. 1501
et seq.), as well as Executive Order 12875,
these final regulations do not include any
federal mandate that may result in expen-
ditures by State, local, or tribal govern-
ments, or the private sector, which may
impose an annual burden of $100 million
adjusted for inflation since 1995.
H.Federalism
Executive Order 13132 outlines funda-
mental principles of federalism. It requires
adherence to specific criteria by federal
agencies in formulating and implementing
policies that have “substantial direct ef-
fects” on the states, the relationship be-
tween the national government and states,
or on the distribution of power and re-
sponsibilities among the various levels of
government. Federal agencies promulgat-
ing regulations that have these federalism
implications must consult with state and
local officials, and describe the extent of
their consultation and the nature of the
concerns of state and local officials in the
preamble to the final regulation.
In the Departments’ view, the final reg-
ulations, by clarifying policy regarding
certain expected benefits options that can
be designed by employers to support their
employees, will provide more certainty to
employers and others in the regulated
community as well as states and political
subdivisions regarding the treatment of
such arrangements under ERISA. Accord-
ingly, the Departments will continue to
affirmatively engage in outreach with of-
ficials of state and political subdivisions
regarding excepted benefits and seek their
input on any federalism implications that
they believe may be presented.
I.Congressional Review Act
These final regulations are subject to
the Congressional Review Act provisions
of the Small Business Regulatory En-
forcement Fairness Act of 1996 (5 U.S.C.
April 6, 2015Bulletin No. 2015–14
840

801 et seq.), which specifies that, before a
rule can take effect, the Federal agency
promulgating the rule shall submit to each
House of the Congress and to the Comp-
troller General a report containing a copy
of the rule along with other specified in-
formation. These final regulations are be-
ing transmitted to Congress and the
Comptroller General for review.
IV. Statutory Authority
The Department of the Treasury regu-
lations are adopted pursuant to the author-
ity contained in sections 7805 and 9833 of
the Code.
The Department of Labor regulations
are adopted pursuant to the authority con-
tained in 29 U.S.C. 1027, 1059, 1135,
1161–1168, 1169, 1181–1183, 1181 note,
1185, 1185a, 1185b, 1191, 1191a, 1191b,
and 1191c; sec. 101(g), Public Law 104–
191, 110 Stat. 1936; sec. 401(b), Public
Law 105–200, 112 Stat. 645 (42 U.S.C.
651 note); sec. 512(d), Public Law 110–
343, 122 Stat. 3765; Public Law 110–
460, 122 Stat. 5123; Secretary of Labor’s
Order 1–2011, 77 FR 1088 (January 9,
2012).
The Department of Health and Human
Services regulations are adopted pursuant
to the authority contained in sections 2701
through 2763, 2791, and 2792 of the PHS
Act (42 U.S.C. 300gg through 300gg–63,
300gg–91, and 300gg–92), as amended.
List of Subjects
26 CFR Part 54
Excise taxes, Health care, Health insur-
ance, Pensions, Reporting and record-
keeping requirements.
29 CFR Part 2590
Continuation coverage, Disclosure,
Employee benefit plans, Group health
plans, Health care, Health insurance,
Medical child support, Reporting and re-
cordkeeping requirements.
45 CFR Part 146
Health care, Health insurance, Report-
ing and recordkeeping requirements, and
State regulation of health insurance.
John M. Dalrymple,
Deputy Commissioner for
Services and Enforcement
Internal Revenue Service
Approved: March 11, 2015
Mark J. Mazur,
Assistant Secretary of the
Treasury (Tax Policy)
Signed this 11th day of March, 2015.
Phyllis C. Borzi,
Assistant Secretary Employee
Benefits Security Administration
Department of Labor
Dated: March 11, 2015.
Andrew M. Slavitt,
Acting Administrator Centers
for Medicare & Medicaid Services
Dated: March 11, 2015.
Sylvia Burwell,
Secretary Department of
Health and Human Services
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Chapter I
Accordingly, 26 CFR part 54 is amended
as follows:
PART 54 —PENSION EXCISE
TAXES
Paragraph 1. The authority citation for
part 54 continues to read in part as fol-
lows:
Authority: Authority: 26 U.S.C. 7805.
***
Section 54.9831–1 also issued under
26 U.S.C. 9833;***
Par 2. Section 54.9831–1 is amended
by adding paragraph (c)(3)(vii) to read as
follows:
§ 54.9831–1 Special rules relating to
group health plans.
*****
(c)***
(3)***
(vii)Limited wraparound coverage.
Limited benefits provided through a group
health plan that wrap around eligible in-
dividual health insurance (or Basic Health
Plan coverage described in section 1331
of the Patient Protection and Affordable
Care Act); or that wrap around coverage
under a Multi-State Plan described in sec-
tion 1334 of the Patient Protection and
Affordable Care Act, collectively referred
to as “limited wraparound coverage,” are
excepted benefits if all of the following
conditions are satisfied. For this purpose,
eligible individual health insurance is in-
dividual health insurance coverage that is
not a grandfathered health plan (as de-
scribed in section 1251 of the Patient Pro-
tection and Affordable Care Act and 29
CFR 2590.715–1251), not a transitional
individual health insurance plan (as de-
scribed in the March 5, 2014 Insurance
Standards Bulletin Series – Extension of
Transitional Policy through October 1,
2016), and does not consist solely of ex-
cepted benefits (as defined in paragraph
(c) of this section).
(A)Covers additional benefits. The
limited wraparound coverage provides
meaningful benefits beyond coverage of
cost sharing under either the eligible indi-
vidual health insurance, Basic Health Pro-
gram coverage, or Multi-State Plan cov-
erage. The limited wraparound coverage
must not provide benefits only under a
coordination-of-benefits provision and
must not consist of an account-based re-
imbursement arrangement.
(B)Limited in amount. The annual cost
of coverage per employee (and any cov-
ered dependents, as defined in
§ 54.9801–2) under the limited wrap-
around coverage does not exceed the
greater of the amount determined under
either paragraph (c)(3)(vii)(B)(1)or(2)of
this section. Making a determination re-
garding the annual cost of coverage per
employee must occur on an aggregate ba-
sis relying on sound actuarial principles.
(1) The maximum permitted annual
salary reduction contribution toward
health flexible spending arrangements, in-
dexed in the manner prescribed under sec-
tion 125(i)(2). For this purpose, the cost of
coverage under the limited wraparound
includes both employer and employee
contributions towards coverage and is de-
Bulletin No. 2015–14April 6, 2015
841

termined in the same manner as the appli-
cable premium is calculated under a CO-
BRA continuation provision.
(2) Fifteen percent of the cost of cov-
erage under the primary plan. For this
purpose, the cost of coverage under the
primary plan and under the limited wrap-
around coverage includes both employer
and employee contributions towards the
coverage and each is determined in the
same manner as the applicable premium is
calculated under a COBRA continuation
provision.
(C)Nondiscrimination. All of the con-
ditions of this paragraph (c)(3)(vii)(C) are
satisfied.
(1)No preexisting condition exclusion.
The limited wraparound coverage does
not impose any preexisting condition ex-
clusion, consistent with the requirements
of section 2704 of the PHS Act (incorpo-
rated by reference into section 9815) and
29 CFR 2590.715–2704.
(2)No discrimination based on health
status. The limited wraparound coverage
does not discriminate against individuals
in eligibility, benefits, or premiums based
on any health factor of an individual (or
any dependent of the individual, as de-
fined in § 54.9801–2), consistent with the
requirements of section 9802 and section
2705 of the PHS Act (incorporated by
reference into section 9815).
(3)No discrimination in favor of highly
compensated individuals. Neither the lim-
ited wraparound coverage, nor any other
group health plan coverage offered by the
plan sponsor, fails to comply with section
2716 of the PHS Act (incorporated by
reference into section 9815) or fails to be
excludible from income for any individual
due to the application of section 105(h)(as
applicable).
(D)Plan eligibility requirements.Indi-
viduals eligible for the wraparound cover-
age are not enrolled in excepted benefit
coverage under paragraph (c)(3)(v) of this
section (relating to health FSAs). In addi-
tion, the conditions set forth in either para-
graph (c)(3)(vii)(D)(1)or(2) of this sec-
tion are met.
(1)Limited wraparound coverage that
wraps around eligible individual insur-
ance for persons who are not full-time
employees. Coverage that wraps around
eligible individual health insurance (or
that wraps around Basic Health Plan cov-
erage) must satisfy all of the conditions of
this paragraph (c)(3)(vii)(D)(1).
(i) For each year for which limited
wraparound coverage is offered, the em-
ployer that is the sponsor of the plan of-
fering limited wraparound coverage, or
the employer participating in a plan offer-
ing limited wraparound coverage, offers
to its full-time employees coverage that is
substantially similar to coverage that the
employer would need to offer to its full-
time employees in order not to be subject
to a potential assessable payment under
the employer shared responsibility provi-
sions of section 4980H(a), if such provi-
sions were applicable; provides minimum
value (as defined in section 36B(c)(2)(C)(ii));
and is reasonably expected to be afford-
able (applying the safe harbor rules for
determining affordability set forth in
§54.4980H–5(e)(2)). If a plan or issuer
providing limited wraparound coverage
takes reasonable steps to ensure that em-
ployers disclose to the plan or issuer nec-
essary information regarding their cover-
age offered and affordability information,
the plan or issuer is permitted to rely on
reasonable representations by employers
regarding this information, unless the plan
or issuer has specific knowledge to the
contrary. In the event that the employer
that is the sponsor of the plan offering
wraparound coverage, or the employer
participating in a plan offering wrap-
around coverage, has no full-time employ-
ees for any plan year limited wraparound
coverage is offered, the requirement of
this paragraph (c)(3)(vii)(D)(1)(i) is con-
sidered satisfied.
(ii) Eligibility for the limited wrap-
around coverage is limited to employees
who are reasonably determined at the time
of enrollment to not be full-time employ-
ees (and their dependents, as defined in
§ 54.9801–2), or who are retirees (and
their dependents, as defined in § 54.9801–
2). For this purpose, full-time employees
are employees who are reasonably ex-
pected to work at least an average of 30
hours per week.
(iii) Other group health plan coverage,
not limited to excepted benefits, is offered
to the individuals eligible for the limited
wraparound coverage. Only individuals
eligible for the other group health plan
coverage are eligible for the limited wrap-
around coverage.
(2)Limited coverage that wraps
around Multi-State Plan coverage. Cov-
erage that wraps around Multi-State Plan
coverage must satisfy all of the conditions
of this paragraph (c)(3)(vii)(D)(2). For
this purpose, the term “full-time em-
ployee” means a “full-time employee” as
defined in§54.4980H–1(a)(21) who is
not in a limited non-assessment period for
certain employees (as defined in
§54.4980H–1(a)(26)). Moreover, if a plan
or issuer providing limited wraparound
coverage takes reasonable steps to ensure
that employers disclose to the plan or is-
suer necessary information regarding their
coverage offered and contribution levels
for 2013 or 2014 (as applicable), and for
any year in which limited wraparound
coverage is offered, the plan or issuer is
permitted to rely on reasonable represen-
tations by employers regarding this infor-
mation, unless the plan or issuer has spe-
cific knowledge to the contrary.
Consistent with the reporting and evalua-
tion criteria of paragraph (c)(3)(vii)(E) of
this section, the Office of Personnel Man-
agement may verify that plans and issuers
have reasonable mechanisms in place to
ensure that contributing employers meet
these standards.
(i) The limited wraparound coverage is
reviewed and approved by the Office of
Personnel Management, consistent with
the reporting and evaluation criteria of
paragraph (c)(3)(vii)(E) of this section, to
provide benefits in conjunction with cov-
erage under a Multi-State Plan authorized
under section 1334 of the Patient Protec-
tion and Affordable Care Act. The Office
of Personnel Management may revoke ap-
proval if it determines that continued ap-
proval is inconsistent with the reporting
and evaluation criteria of paragraph
(c)(3)(vii)(E) of this section.
(ii) The employer offered coverage in
the plan year that began in either 2013 or
2014 that is substantially similar to cov-
erage that the employer would need to
have offered to its full-time employees in
order to not be subject to an assessable
payment under the employer shared re-
sponsibility provisions of section
4980H(a), if such provisions had been ap-
plicable. In the event that a plan that of-
fered coverage in 2013 or 2014 has no
full-time employees for any plan year lim-
ited wraparound coverage is offered, the
April 6, 2015Bulletin No. 2015–14
842

requirement of this paragraph
(c)(3)(vii)(D)(2)(ii) is considered satis-
fied.
(iii) In the plan year that began in either
2013 or 2014, the employer offered cov-
erage to a substantial portion of full-time
employees that provided minimum value
(as defined in section 36B(c)(2)(C)(ii))
and was affordable (applying the safe har-
bor rules for determining affordability set
forth in§54.4980H–5(e)(2)). In the event
that the plan that offered coverage in 2013
or 2014 has no full-time employees for
any plan year limited wraparound cover-
age is offered, the requirement of this
paragraph (c)(3)(vii)(D)(2)(iii) is consid-
ered satisfied.
(iv) For the duration of the pilot pro-
gram, as described in paragraph
(c)(3)(vii)(F) of this section, the employ-
er’s annual aggregate contributions for
both primary and limited wraparound cov-
erage are substantially the same as the
employer’s total contributions for cover-
age offered to full-time employees in
2013 or 2014.
(E)Reporting–(1)Reporting by group
health plans and group health insurance
issuers. A self-insured group health plan,
or a health insurance issuer, offering or
proposing to offer limited wraparound
coverage in connection with Multi-State
Plan coverage pursuant to paragraph
(c)(3)(vii)(D)(2) of this section reports to
the Office of Personnel Management
(OPM), in a form and manner specified in
guidance, information OPM reasonably
requires to determine whether the plan or
issuer qualifies to offer such coverage or
complies with the applicable requirements
of this section.
(2)Reporting by group health plan
sponsors. The plan sponsor of a group
health plan offering limited wraparound
coverage under paragraph (c)(3)(vii) of
this section, must report to the Department
of Health and Human Services (HHS), in
a form and manner specified in guidance,
information HHS reasonably requires.
(F)Pilot program with sunset. The pro-
visions of paragraph (c)(3)(vii) of this sec-
tion apply to limited wraparound coverage
that is first offered no earlier than January
1, 2016 and no later than December 31,
2018 and that ends no later than on the
later of:
(1) The date that is three years after the
date limited wraparound coverage is first
offered; or
(2) The date on which the last collec-
tive bargaining agreement relating to the
plan terminates after the date limited
wraparound coverage is first offered (de-
termined without regard to any extension
agreed to after the date limited wrap-
around coverage is first offered).
*****
Section 42.—Low-Income
Housing Credit
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of April 2015. See Rev. Rul. 2015–7, page 849.
Section 280G.—Golden
Parachute Payments
Federal short-term, mid-term, and long-term
rates are set forth for the month of April 2015. See
Rev. Rul. 2015–7, page 849.
Section 382.—Limitation
on Net Operating Loss
Carryforwards and Certain
Built-In Losses Following
Ownership Change
The adjusted applicable federal long-term rate is
set forth for the month of April 2015. See Rev. Rul.
2015–7, page 849.
Section 412.—Minimum
Funding Standards
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of April 2015. See Rev. Rul. 2015–7, page 849.
Section 467.—Certain
Payments for the Use of
Property or Services
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of April 2015. See Rev. Rul. 2015–7, page 849.
Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of April 2015. See Rev. Rul. 2015–7, page 849.
Section 482.—Allocation of
Income and Deductions
Among Taxpayers
Federal short-term, mid-term, and long-term
rates are set forth for the month of April 2015. See
Rev. Rul. 2015–7, page 849.
Section 483.—Interest on
Certain Deferred Payments
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of April 2015. See Rev. Rul. 2015–7, page 849.
Section 642.—Special
Rules for Credits and
Deductions
Federal short-term, mid-term, and long-term
rates are set forth for the month of April 2015. See
Rev. Rul. 2015–7, page 849.
Section 807.—Rules for
Certain Reserves
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of April 2015. See Rev. Rul. 2015–7, page 849.
Section 846.—Discounted
Unpaid Losses Defined
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of April 2015. See Rev. Rul. 2015–7, page 849.
Bulletin No. 2015–14April 6, 2015
843

Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of April 2015. See Rev. Rul. 2015–7, page 849.
Section 7520.—Valuation
Tables
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of April 2015. See Rev. Rul. 2015–7, page 849.
Section 7872.—Treatment
of Loans With Below-
Market Interest Rates
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of April 2015. See Rev. Rul. 2015–7, page 849.
April 6, 2015Bulletin No. 2015–14
844

Part III. Administrative, Procedural, and Miscellaneous
Guidance on the
Application of Code
§ 4980D to Certain Types
of Health Coverage
Reimbursement
Arrangements
Notice 2015–17
I. PURPOSE AND OVERVIEW
This notice reiterates the conclusion in
previous guidance addressing employer
payment plans, including Notice 2013–54,
2013–40 I.R.B. 287,
32
that employer pay-
ment plans are group health plans that will
fail to comply with the market reforms
that apply to group health plans under the
Affordable Care Act (ACA).
33
For this
purpose, an employer payment plan as
described in Notice 2013–54 refers to a
group health plan under which an em-
ployer reimburses an employee for some
or all of the premium expenses incurred
for an individual health insurance policy
or directly pays a premium for an individ-
ual health insurance policy covering the
employee, such as arrangements described
in Revenue Ruling 61–146, 1961–2 C.B.
25. This notice also provides transition
relief from the assessment of excise tax
under Internal Revenue Code (Code)
§ 4980D for failure to satisfy market re-
forms in certain circumstances. The tran-
sition relief applies to employer health-
care arrangements that constitute (1)
employer payment plans, as described in
Notice 2013–54, if the plan is sponsored
by an employer that is not an Applicable
Large Employer (ALE) under Code
§ 4980H(c)(2) and §§ 54.4980H–1(a)(4)
and –2; (2) S corporation healthcare ar-
rangements for 2-percent shareholder-em-
ployees;
34
(3) Medicare premium reim-
bursement arrangements; and (4)
TRICARE-related health reimbursement
arrangements (HRAs). This notice also
provides additional guidance on the tax
treatment of employer payment plans.
This notice supplements and clarifies the
guidance provided in Notice 2013–54 and
other guidance in response to comments
and questions from taxpayers and stake-
holder groups about certain aspects of that
guidance.
The United States Department of La-
bor (DOL) and the United States Depart-
ment of Health and Human Services
(HHS) (collectively with the Treasury De-
partment and the IRS, the Departments)
have reviewed this notice and have ad-
vised the Treasury Department and the
IRS that they agree with the guidance
provided in this notice.
The Treasury Department and the IRS
anticipate that clarifications regarding
other aspects of employer payment plans
and HRAs will be provided in the near
future. This notice is intended to provide
further clarification of the guidance pro-
vided in Notice 2013–54 and other guid-
ance and is intended to be read in con-
junction with that guidance.
II. GUIDANCE
Question 1 (Transition Relief for
Small Employers from the Code § 4980D
Excise Tax ): Small employers have in the
past often offered their employees health
coverage through arrangements that
would constitute an employer payment
plan as described in Notice 2013–54. If an
employer offered coverage through such
an arrangement, will the employer owe an
excise tax under Code § 4980D?
Answer 1:In general, yes; however,
this notice provides limited transition re-
lief for coverage sponsored by an em-
ployer that is not an ALE under
§§ 54.4980H–1(a)(4) and –2.
Notice 2013–54 concludes that the ar-
rangements constituting employer pay-
ment plans as described in that notice fail
to comply with the market reforms and
may subject employers to the excise tax
under Code § 4980D. At the same time,
the Departments understand that some
employers that had been offering health
coverage through an employer payment
plan may need additional time to obtain
group health coverage or adopt a suitable
alternative.
The SHOP Marketplace addresses
many of the concerns of small employers.
However, because the market is still tran-
sitioning and the transition by eligible em-
ployers to SHOP Marketplace coverage or
other alternatives will take time to imple-
ment, this guidance provides that the ex-
cise tax under Code § 4980D will not be
asserted for any failure to satisfy the mar-
ket reforms by employer payment plans
that pay, or reimburse employees for in-
dividual health policy premiums or Medi-
care part B or Part D premiums (1) for
2014 for employers that are not ALEs for
2014, and (2) for January 1 through June
30, 2015 for employers that are not ALEs
for 2015. After June 30, 2015, such em-
ployers may be liable for the Code
§ 4980D excise tax.
For purposes of this Q&A–1, an ALE
generally is, with respect to a calendar year,
an employer that employed an average of at
least 50 full-time employees (including full-
time equivalent employees) on business
days during the preceding calendar year.
See Code § 4980H(c)(2) and §§ 54.4980H–
1(a)(4) and –2. For determining whether an
32
There have been four prior issuances on the topics addressed in this notice: (1) FAQs About Affordable Care Act Implementation (Part XI), issued on January 24, 2013 by DOL
(http://www.dol.gov/ebsa/faqs/faq-aca11.html) and HHS (http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs11.html); (2) IRS Notice 2013–54 and
DOL Technical Release 2013–03, issued on September 13, 2013; (3) IRS FAQ on Employer Healthcare Arrangements (http://www.irs.gov/Affordable-Care-Act/Employer-Health-Care-
Arrangements); and (4) FAQs About Affordable Care Act Implementation (Part XXII), issued on November 6, 2014 by DOL (http://www.dol.gov/ebsa/faqs/faq-aca22.html) and HHS
(http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/FAQs-Part-XXII-FINAL.pdf).
33
The “Affordable Care Act” or “ACA” refers to the Patient Protection and Affordable Care Act (enacted March 23, 2010, Pub. L. No. 111–148), as amended bythe Health Care and
Education Reconciliation Act of 2010 (enacted March 30, 2010, Pub. L. No. 111–152), and as further amended by the Department of Defense and Full-Year Continuing Appropriations Act,
2011 (enacted April 15, 2011, Pub. L. No. 112–10), Section 1001 of the ACA added new Public Health Service Act (PHS Act) §§ 2711–2719. Section 1563 of theACA (as amended by
ACA § 10107(b)) added Code § 9815(a) and Employee Retirement Income Security Act (ERISA) § 715(a) to incorporate the provisions of part A of title XXVIIof the PHS Act into the
Code and ERISA, and to make them applicable to group health plans and health insurance issuers providing health insurance coverage in connection withgroup health plans. The PHS Act
sections incorporated by these references are §§ 2701 through 2728. Accordingly, these referenced PHS Act sections (i.e., the market reforms) are subject to shared interpretive jurisdiction
by the Departments.
34
For purposes of S corporations, 2-percent shareholder generally means any person who owns more than 2 percent of the stock of the S corporation. See Code §1372(b)(2).
Bulletin No. 2015–14April 6, 2015
845

entity was an ALE for 2014 and for 2015,
an employer may determine its status as an
applicable large employer by reference to a
period of at least six consecutive calendar
months, as chosen by the employer, during
the 2013 calendar year for determining ALE
status for 2014 and during the 2014 calendar
year for determining ALE status for 2015,
as applicable (rather than by reference to the
entire 2013 calendar year and the entire
2014 calendar year, as applicable). See sec-
tion IX.E of the preamble to the proposed
regulations under § 4980H (78 FR 218, 238)
(Jan. 2, 2013) and section XV.D.3 of the
preamble to the final regulations under
§ 4980H (79 FR 8544, 8573) (Feb. 12,
2014).
Employers eligible for the relief de-
scribed in this Q&A–1 that have employer
payment plans are not required to file IRS
Form 8928 (regarding failures to satisfy
requirements for group health plans under
chapter 100 of the Code, including the
market reforms) solely as a result of hav-
ing such arrangements for the period for
which the employer is eligible for the re-
lief. This relief does not extend to stand-
alone HRAs or other arrangements to re-
imburse employees for medical expenses
other than insurance premiums.
Question 2 (Treatment of S corpora-
tion healthcare arrangements for
2-percent shareholder-employees):IRS
Notice 2008–1, 2008–2 I.R.B. 1, provides
that if an S corporation pays for or reim-
burses premiums for individual health in-
surance coverage covering a 2-percent
shareholder (as defined in Code
§ 1372(b)(2)), the payment or reimburse-
ment is included in income but the
2-percent shareholder-employee may de-
duct the amount of the premiums under
Code § 162(l), provided that all other el-
igibility criteria for deductibility under
Code § 162(l) are satisfied. (This arrange-
ment is referred to in this notice as a
2-percent shareholder-employee health-
care arrangement.) Is a 2-percent
shareholder-employee healthcare arrange-
ment subject to the market reforms?
Answer 2:The Departments are con-
templating publication of additional guid-
ance on the application of the market re-
forms to a 2-percent shareholder-
employee healthcare arrangement. Until
such guidance is issued, and in any event
through the end of 2015, the excise tax
under Code § 4980D will not be asserted
for any failure to satisfy the market re-
forms by a 2-percent shareholder-
employee healthcare arrangement. Fur-
ther, unless and until additional guidance
provides otherwise, an S corporation with
a 2-percent shareholder-employee health-
care arrangement will not be required to
file IRS Form 8928 (regarding failures to
satisfy requirements for group health
plans under chapter 100 of the Code, in-
cluding the market reforms) solely as a
result of having a 2-percent shareholder-
employee healthcare arrangement.
The guidance provided in this Q&A–2
(including the guidance provided in the
preceding paragraph) does not apply to
reimbursements of individual health in-
surance coverage with respect to employ-
ees of an S corporation who are not
2-percent shareholders (but see Q&A–1).
The Treasury Department and the IRS
are also considering whether additional
guidance is needed on the federal tax
treatment of 2-percent shareholder-
employee healthcare arrangements. How-
ever, unless and until additional guidance
provides otherwise, taxpayers may con-
tinue to rely on Notice 2008–1 with re-
gard to the tax treatment of arrangements
described therein for all federal income
and employment tax purposes. To the ex-
tent that a 2-percent shareholder is al-
lowed both the deduction under Code
§ 162(l) and the premium tax credit under
Code § 36B, Revenue Procedure 2014–
41, 2014–33 I.R.B. 364, provides guid-
ance on computing the deduction and the
credit with respect to the 2-percent share-
holder.
Code § 9831(a)(2) provides that the
market reforms do not apply to a group
health plan that has fewer than two par-
ticipants who are current employees on
the first day of the plan year. Accordingly,
an arrangement covering only a single
employee (whether or not that employee
is a 2-percent shareholder-employee) gen-
erally is not subject to the market reforms
whether or not such a reimbursement ar-
rangement otherwise constitutes a group
health plan. If an S corporation maintains
more than one such arrangement for dif-
ferent employees (whether or not
2-percent shareholder-employees), how-
ever, all such arrangements are treated as
a single arrangement covering more than
one employee so that the exception in
Code § 9831(a)(2) does not apply. For this
purpose, if both a non-2-percent share-
holder employee of the S corporation and
a 2-percent shareholder employee of the S
corporation are receiving reimbursements
for individual premiums, the arrangement
would be considered a group health plan
for more than one current employee.
However, if an employee is covered under
a reimbursement arrangement with other-
than-self-only coverage (such as family
coverage) and another employee is cov-
ered by that same coverage as a spouse or
dependent of the first employee, the ar-
rangement would be considered to cover
only the one employee.
Question 3 (Integration of Medicare
premium reimbursement arrangement
and TRICARE-related HRA with a
group health plan):If an employer offers
to reimburse Medicare premiums for its
active employees, does this arrangement
create an employer payment plan under
Notice 2013–54? If so, may the employer
payment plan be integrated with another
group health plan to satisfy the annual
dollar limit and preventive services re-
quirements? Similarly, does an arrange-
ment under which an employer reim-
burses (or pays directly) some or all of
medical expenses for employees covered
by TRICARE constitute an HRA subject
to the market reforms? If so, may the
HRA be integrated with another group
health plan to satisfy the annual dollar
limit and preventive services require-
ments?
Answer 3:Medicare premium reim-
bursement arrangements. An arrangement
under which an employer reimburses (or
pays directly) some or all of Medicare
Part B or Part D premiums for employees
constitutes an employer payment plan, as
described in Notice 2013–54, and if such
an arrangement covers two or more active
employees, is a group health plan subject
to the market reforms. An employer pay-
ment plan may not be integrated with
Medicare coverage to satisfy the market
reforms because Medicare coverage is not
a group health plan. However, an em-
ployer payment plan that pays for or re-
imburses Medicare Part B or Part D pre-
miums is integrated with another group
health plan offered by the employer for
purposes of the annual dollar limit prohi-
April 6, 2015Bulletin No. 2015–14
846

bition and the preventive services require-
ments if (1) the employer offers a group
health plan (other than the employer pay-
ment plan) to the employee that does not
consist solely of excepted benefits and
offers coverage providing minimum val-
ue; (2) the employee participating in the
employer payment plan is actually en-
rolled in Medicare Parts A and B; (3) the
employer payment plan is available only
to employees who are enrolled in Medi-
care Part A and Part B or Part D; and (4)
the employer payment plan is limited to
reimbursement of Medicare Part B or Part
D premiums and excepted benefits, in-
cluding Medigap premiums. Note that to
the extent such an arrangement is avail-
able to active employees, it may be sub-
ject to restrictions under other laws such
as the Medicare secondary payer provi-
sions. An employer payment plan that has
fewer than two participants who are cur-
rent employees (for example, a retiree-
only plan) on the first day of the plan year
is not subject to the market reforms and,
therefore, integration is not necessary to
satisfy the market reforms.
TRICARE-related HRAs. Similarly, an
arrangement under which an employer re-
imburses (or pays directly) some or all of
medical expenses for employees covered
by TRICARE constitutes an HRA, and, as
provided in Notice 2013–54, if such an
arrangement covers two or more active
employees, is a group health plan subject
to the market reforms. An HRA may not
be integrated with TRICARE to satisfy
the market reforms because TRICARE is
not a group health plan for integration
purposes. However, an HRA that pays for
or reimburses medical expenses for em-
ployees covered by TRICARE is inte-
grated with another group health plan of-
fered by the employer for purposes of the
annual dollar limit prohibition and the
preventive services requirements if (1) the
employer offers a group health plan (other
than the HRA) to the employee that does
not consist solely of excepted benefits and
offers coverage providing minimum val-
ue; (2) the employee participating in the
HRA is actually enrolled in TRICARE;
(3) the HRA is available only to employ-
ees who are enrolled in TRICARE; and
(4) the HRA is limited to reimbursement
of cost sharing and excepted benefits, in-
cluding TRICARE supplemental premi-
ums. Note that to the extent such an ar-
rangement is available to active
employees, employers should be aware of
laws that prohibit offering financial or
other incentives for TRICARE-eligible
employees to decline employer-provided
group health plan coverage, similar to the
Medicare secondary payer rules.
Note that an employer may provide
more than one type of healthcare arrange-
ment for its employees (for example, a
Medicare Part B employer payment plan
and a TRICARE-related HRA), provided
that each arrangement meets the applica-
ble integration or other rules set forth in
this notice or in related guidance.
Question 4 (Increases in employee
compensation to assist with payments of
individual market coverage):If an em-
ployer increases an employee’s compen-
sation, but does not condition the payment
of the additional compensation on the pur-
chase of health coverage (or otherwise
endorse a particular policy, form, or issuer
of health insurance), is this arrangement
an employer payment plan?
Answer 4:No. As described in Notice
2013–54, an employer payment plan is a
group health plan under which an em-
ployer reimburses an employee for some
or all of the premium expenses incurred
for an individual health insurance policy
or directly pays a premium for an individ-
ual health insurance policy covering the
employee, such as arrangements described
in Rev. Rul. 61–146. The arrangement
described in this Q&A–4 does not meet
that description. In addition, because the
arrangement described in this Q&A–4
generally will not constitute a group
health plan, it is not subject to the market
reforms.
35
Providing employees with in-
formation about the Marketplace or the
premium tax credit under Code § 36B is
not endorsement of a particular policy,
form, or issuer of health insurance.
Question 5 (Treatment of an employer
payment plan as taxable compensation):
Notice 2013–54 provides that the payment
arrangement described in Rev. Rul. 61–
146 is an employer payment plan. May the
reimbursements or payments under an ar-
rangement described in Rev. Rul. 61–146
be provided on an after-tax basis and, if
so, will this cause the arrangement not to
be a group health plan (and accordingly
not to be subject to the market reforms)?
Answer 5:No. Rev. Rul. 61–146 holds
that under certain conditions, if an em-
ployer reimburses an employee’s substan-
tiated premiums for non-employer spon-
sored hospital and medical insurance, the
payments are excluded from the employ-
ee’s gross income under Code § 106. This
exclusion also applies if the employer
pays the premiums directly to the insur-
ance company. The holding in Rev. Rul.
61–146 continues to apply, meaning only
that payments under arrangements that
meet the conditions set forth in Rev. Rul.
61–146 are excludable from the employ-
ee’s gross income under Code § 106 (re-
gardless of whether the employer includes
the payments as wage payments on the
Form W–2). However, Rev. Rul. 61–146
does not address the application of the
market reforms and should not be read as
containing any implication regarding the
application of the market reforms. As ex-
plained in Notice 2013–54, an arrange-
ment under which an employer provides
reimbursements or payments that are ded-
icated to providing medical care, such as
cash reimbursements for the purchase of
an individual market policy, is itself a
group health plan. Accordingly, the ar-
rangement is subject to the market reform
provisions of the Affordable Care Act ap-
plicable to group health plans without re-
gard to whether the employer treats the
money as pre-tax or post-tax to the em-
ployee. Such employer health care ar-
rangements cannot be integrated with in-
dividual market policies to satisfy the
market reforms and, therefore, will fail to
satisfy PHS Act §§ 2711 (annual limit
prohibition) and 2713 (requirement to
provide cost-free preventive services)
among other provisions.
III. FOR FURTHER INFORMATION
Questions concerning the information
contained in this notice may be directed to
the IRS at 202-317-6846. Additional in-
formation for employers regarding the Af-
35
For more information on establishing or maintaining a group health plan under ERISA, see 29 CFR 2510.3–1(j) and the Department of Labor’s Field Assistance Bulletins Nos. 2006–2
and 2004–1, available at http://www.dol.gov/ebsa/regs/fab2006-2.html and http://www.dol.gov/ebsa/regs/fab2004-1.html.
Bulletin No. 2015–14April 6, 2015
847

fordable Care Act is available at
www.healthcare.gov,www.dol.gov/ebsa/
healthreform, and atwww.business.usa.gov.
IV. DRAFTING INFORMATION
The principal author of this notice is
Shad Fagerland of the Office of Associate
Chief Counsel (Tax Exempt and Govern-
ment Entities). Forfurther information re-
garding this notice, contact Mr. Fagerland at
(202) 317-5500 (not a toll-free number).
Notice 2015–28
I. Extension of Temporary
Nondiscrimination Relief for Closed
Defined Benefit Plans
Notice 2014–5, 2014–2 I.R.B. 276,
provides temporary nondiscrimination re-
lief for certain “closed” defined benefit
pension plans (i.e., defined benefit plans
that provide ongoing accruals but that
have been amended to limit those accruals
to some or all of the employees who par-
ticipated in the plan on a specified date).
Specifically, for plan years beginning be-
fore 2016, Section III.B of Notice 2014–5
permits a DB/DC plan that includes a
closed defined benefit plan (that was
closed before December 13, 2013) and
that satisfies certain conditions set forth in
the notice to demonstrate satisfaction of
the nondiscrimination in amount require-
ment of § 1.401(a)(4)–1(b)(2) on the basis
of equivalent benefits even if the DB/DC
plan does not meet any of the existing
eligibility conditions for testing on that
basis under § 1.401(a)(4)–9(b)(2)(v).
This notice extends the temporary non-
discrimination relief provided in Notice
2014–5 for an additional year by applying
that relief to plan years beginning before
2017 if the conditions of Notice 2014–5
are satisfied. During the period for which
this extension applies, the remaining pro-
visions of the nondiscrimination regula-
tions under § 401(a)(4) (including the
rules relating to the timing of plan amend-
ments under § 1.401(a)(4)–5) continue to
apply.
The extension described in this notice
is provided in anticipation of the issuance
of proposed amendments to the
§ 401(a)(4) regulations that would be fi-
nalized and apply after the relief under
Notice 2014–5 and this notice expires.
II. EFFECT ON OTHER
DOCUMENTS
Notice 2014–5 is modified.
DRAFTING INFORMATION
The principal author of this notice is
Kelly C. Scanlon of the Office of the
Associate Chief Counsel (Tax Exempt
and Government Entities). However,
other personnel from the IRS participated
in development of this guidance. For fur-
ther information regarding this notice,
please contact Ms. Scanlon or Linda Mar-
shall at (202) 317-6700.
26 CFR 601.105: Examination of returns and claims
for refund, credit, or abatement; determination of
correct tax liability.
(Also Part I, §§ 911; 1.911–1.)
Rev. Proc. 2015–25
SECTION 1. PURPOSE
.01 This revenue procedure provides
information to any individual who failed
to meet the eligibility requirements of sec-
tion 911(d)(1) of the Internal Revenue
Code because adverse conditions in a for-
eign country precluded the individual
from meeting those requirements for tax-
able year 2014.
.02 This revenue procedure lists the
countries for which the eligibility require-
ments of section 911(d)(1) are waived for
taxable year 2014.
SECTION 2. BACKGROUND
.01 Sections 911(a) and (c)(4) of the
Code allow a “qualified individual,” as
defined in section 911(d) to exempt from
taxation the individual’s foreign earned
income and the housing cost amount.
.02 Section 911(d)(1) of the Code de-
fines the term “qualified individual” as an
individual whose tax home is in a foreign
country and who is (A) a citizen of the
United States and establishes to the satis-
faction of the Secretary of the Treasury
that the individual has been abona fide
resident of a foreign country or countries
for an uninterrupted period that includes
an entire taxable year, or (B) a citizen or
resident of the United States who, during
any period of 12 consecutive months, is
present in a foreign country or countries
during at least 330 full days.
.03 Section 911(d)(4) of the Code pro-
vides an exception to the eligibility re-
quirements of section 911(d)(1). An indi-
vidual will be treated as a qualified
individual with respect to a period in
which the individual was abona fideres-
ident of, or was present in, a foreign coun-
try if the individual left the country during
a period for which the Secretary of the
Treasury, after consultation with the Sec-
retary of State, determines that individuals
were required to leave because of war,
civil unrest, or similar adverse conditions
that precluded the normal conduct of busi-
ness. An individual must establish that but
for those conditions the individual could
reasonably have been expected to meet
the eligibility requirements.
.04 For 2014, the Secretary of the Trea-
sury, in consultation with the Secretary of
State, has determined that war, civil un-
rest, or similar adverse conditions pre-
cluded the normal conduct of business in
the following countries beginning on the
specified date:
Country
Date of Departure
on or after
LibyaJuly 26, 2014
YemenSeptember 24, 2014
Accordingly, for purposes of section 911
of the Code, an individual who left one of
the foregoing countries on or after the
specified departure date during 2014 will
be treated as a qualified individual with
respect to the period during which that
individual was present in, or was abona
fideresident of, such foreign country if the
individual establishes a reasonable expec-
tation of meeting the requirements of sec-
tion 911(d) but for those conditions.
.05 To qualify for relief under section
911(d)(4) of the Code, an individual must
have established residency, or have been
physically present, in the foreign country
on or prior to the date that the Secretary of
the Treasury determines that individuals
were required to leave the foreign country.
Individuals who establish residency, or
are first physically present, in the foreign
country after the date that the Secretary
April 6, 2015Bulletin No. 2015–14
848

prescribes will not be treated as qualified
individuals under section 911(d)(4) of the
Code. For example, individuals who were
first physically present or established res-
idency in Libya after July 26, 2014, are
not eligible to qualify for the exception
provided in section 911(d)(4) of the Code
for taxable year 2014.
SECTION 3. INQUIRIES
A taxpayer who needs assistance on
how to claim this exclusion, or on how to
file an amended return, should contact a
local IRS Office or, for a taxpayer residing
or traveling outside the United States, the
nearest overseas IRS office.
SECTION 4. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Kate Y. Hwa of the Office of
Associate Chief Counsel (International).
For further information regarding this rev-
enue procedure contact Kate Y. Hwa on
(202) 317-6934 (not a toll free number).
Section 1274.—
Determination of Issue
Price in the Case of
Certain Debt Instruments
Issued for Property
(Also Sections 42, 280G, 382, 412, 467, 468, 482,
483, 642, 807, 846, 1288, 7520, 7872.)
Rev. Rul. 2015–7
This revenue ruling provides various
prescribed rates for federal income tax
purposes for April 2015 (the current
month). Table 1 contains the short-term,
mid-term, and long-term applicable fed-
eral rates (AFR) for the current month for
purposes of section 1274(d) of the Internal
Revenue Code. Table 2 contains the short-
term, mid-term, and long-term adjusted
applicable federal rates (adjusted AFR)
for the current month for purposes of sec-
tion 1288(b). Table 3 sets forth the ad-
justed federal long-term rate and the long-
term tax-exempt rate described in section
382(f). Table 4 contains the appropriate
percentages for determining the low-
income housing credit described in sec-
tion 42(b)(1) for buildings placed in ser-
vice during the current month. However,
under section 42(b)(2), the applicable per-
centage for non-federally subsidized new
buildings placed in service after July 30,
2008, with respect to housing credit dollar
amount allocations made before January
1, 2015 shall not be less than 9%. Finally,
Table 5 contains the federal rate for de-
termining the present value of an annuity,
an interest for life or for a term of years, or
a remainder or a reversionary interest for
purposes of section 7520.
REV. RUL. 2015–7 TABLE 1
Applicable Federal Rates (AFR) for April 2015
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR.48%.48%.48%.48%
110% AFR.53%.53%.53%.53%
120% AFR.58%.58%.58%.58%
130% AFR.62%.62%.62%.62%
Mid-term
AFR1.70%1.69%1.69%1.68%
110% AFR1.87%1.86%1.86%1.85%
120% AFR2.04%2.03%2.02%2.02%
130% AFR2.21%2.20%2.19%2.19%
150% AFR2.56%2.54%2.53%2.53%
175% AFR2.98%2.96%2.95%2.94%
Long-term
AFR2.47%2.45%2.44%2.44%
110% AFR2.72%2.70%2.69%2.68%
120% AFR2.96%2.94%2.93%2.92%
130% AFR3.22%3.19%3.18%3.17%
Bulletin No. 2015–14April 6, 2015
849

REV. RUL. 2015–7 TABLE 2
Adjusted AFR for April 2015
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adjusted AFR.40%.40%.40%.40%
Mid-term adjusted AFR1.37%1.37%1.37%1.37%
Long-term adjusted AFR2.47%2.45%2.442.44
REV. RUL. 2015–7 TABLE 3
Rates Under Section 382 for April 2015
Adjusted federal long-term rate for the current month2.47%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the
adjusted federal long-term rates for the current month and the prior two months.)
2.47
REV. RUL. 2015–7 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for April 2015
Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July
30, 2008, with respect to housing credit dollar amount allocations made before January 1, 2015, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit7.48%
Appropriate percentage for the 30% present value low-income housing credit3.21%
REV. RUL. 2015–7 TABLE 5
Rate Under Section 7520 for April 2015
Applicable federal rate for determining the present value of an annuity, an interest for life or
a term of years, or a remainder or reversionary interest
2.0%
April 6, 2015Bulletin No. 2015–14
850

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarifiedis used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified andclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Supersededdescribes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the new
ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example, modified and
supersededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current
use and formerly used will appear in ma-
terial published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE
—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
Bulletin No. 2015–14April 6, 2015
i

Numerical Finding List
1
Bulletin 2015–1 through 2015–14
Announcements:
2015-1, 2015-11 I.R.B.758
2015-2, 2015-3 I.R.B.324
2015-3, 2015-3 I.R.B.328
2015-4, 2015-5 I.R.B.565
2015-5, 2015-7 I.R.B.602
2015-6, 2015-8 I.R.B.685
2015-7, 2015-13 I.R.B.823
2015-8, 2015-9 I.R.B.698
2015-10, 2015-11 I.R.B.758
2015-12, 2015-12 I.R.B.770
Proposed Regulations:
REG-109187-11, 2015-2 I.R.B.277
REG-132751-14, 2015-2 I.R.B.279
REG-145878-14, 2015-2 I.R.B.290
REG-153656-3, 2015-5 I.R.B.566
REG-102648-15, 2015-10 I.R.B.745
REG-136018-13, 2015-11 I.R.B.759
REG-143416-14, 2015-11 I.R.B.757
REG-100400-14, 2015-12 I.R.B.779
REG-132253-11, 2015-12 I.R.B.771
REG-143040-11, 2015-13 I.R.B.827
Notices:
2015-1, 2015-2 I.R.B.249
2015-2, 2015-4 I.R.B.334
2015-3, 2015-6 I.R.B.583
2015-4, 2015-5 I.R.B.407
2015-5, 2015-5 I.R.B.408
2015-6, 2015-5 I.R.B.412
2015-7, 2015-6 I.R.B.585
2015-8, 2015-6 I.R.B.589
2015-9, 2015-6 I.R.B.590
2015-11, 2015-8 I.R.B.618
2015-15, 2015-9 I.R.B.687
2015-12, 2015-8 I.R.B.700
2015-13, 2015-10 I.R.B.722
2015-14, 2015-10 I.R.B.722
2015-16, 2015-10 I.R.B.732
2015-17, 2015-14 I.R.B.845
2015-19, 2015-9 I.R.B.690
2015-20, 2015-11 I.R.B.754
2015-18, 2015-12 I.R.B.765
2015-21, 2015-12 I.R.B.765
2015-22, 2015-12 I.R.B.768
2015-23, 2015-12 I.R.B.769
2015-24, 2015-13 I.R.B.811
2015-25, 2015-13 I.R.B.814
2015-26, 2015-13 I.R.B.814
2015-27, 2015-13 I.R.B.816
2015-28, 2015-14 I.R.B.848
Revenue Procedures:
2015-1, 2015-1 I.R.B.1
2015-2, 2015-1 I.R.B.105
2015-3, 2015-1 I.R.B.129
2015-4, 2015-1 I.R.B.144
2015-5, 2015-1 I.R.B.186
2015-6, 2015-1 I.R.B.194
2015-7, 2015-1 I.R.B.231
2015-8, 2015-1 I.R.B.235
2015-9, 2015-2 I.R.B.249
2015-10, 2015-2 I.R.B.261
2015-12, 2015-2 I.R.B.265
2015-13, 2015-5 I.R.B.419
2015-14, 2015-5 I.R.B.450
2015-15, 2015-5 I.R.B.564
2015-16, 2015-7 I.R.B.596
2015-17, 2015-7 I.R.B.599
2015-18, 2015-8 I.R.B.642
2015-19, 2015-8 I.R.B.678
2015-20, 2015-9 I.R.B.694
2015-21, 2015-13 I.R.B.817
2015-22, 2015-11 I.R.B.754
2015-23, 2015-13 I.R.B.820
2015-24, 2015-13 I.R.B.822
2015-25, 2015-14 I.R.B.848
Revenue Rulings:
2015-1, 2015-4 I.R.B.331
2015-2, 2015-3 I.R.B.321
2015-3, 2015-6 I.R.B.580
2015-4, 2015-10 I.R.B.743
2015-5, 2015-13 I.R.B.788
2015-6, 2015-13 I.R.B.801
2015-7, 2015-14 I.R.B.849
Treasury Decisions:
9707, 2015-2 I.R.B.247
9708, 2015-5 I.R.B.337
9709, 2015-7 I.R.B.593
9710, 2015-8 I.R.B.603
9711, 2015-11 I.R.B.748
9712, 2015-11 I.R.B.750
9713, 2015-13 I.R.B.802
9714, 2015-14 I.R.B.831
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2014–27 through 2014–52 is in Internal Revenue Bulletin
2014–52, dated December 28, 2014.
April 6, 2015Bulletin No. 2015–14
ii

Finding List of Current Actions on
Previously Published Items
1
Bulletin 2015–1 through 2015–14
Announcements:
2010-3
Amplified by
Ann. 2015-3, 2015-3 I.R.B.328
Revenue Procedures:
2014-01
Superseded by
Rev. Proc. 2015-01, 2015-01 I.R.B.1
2014-02
Superseded by
Rev. Proc. 2015-02, 2015-01 I.R.B.105
2014-03
Superseded by
Rev. Proc. 2015-03, 2015-01 I.R.B.129
2014-04
Superseded by
Rev. Proc. 2015-04, 2015-01 I.R.B.144
2014-05
Superseded by
Rev. Proc. 2015-05, 2015-01 I.R.B.186
2014-06
Superseded by
Rev. Proc. 2015-06, 2015-01 I.R.B.194
2014-07
Superseded by
Rev. Proc. 2015-07, 2015-01 I.R.B.231
2014-08
Superseded by
Rev. Proc. 2015-08, 2015-01 I.R.B.235
2014-10
Superseded by
Rev. Proc. 2015-10, 2015-2 I.R.B.261
2003-63
Superseded by
Rev. Proc. 2015-12, 2015-2 I.R.B.265
2011-14
Modified by
Rev. Proc. 2015-12, 2015-2 I.R.B.265
2011-14
Modified by
Rev. Proc. 2015-13, 2015-5 I.R.B.419
Revenue Procedures—Continued
2011-14
Amplified by
Rev. Proc. 2015-13, 2015-5 I.R.B.419
2011-14
Clarified by
Rev. Proc. 2015-13, 2015-5 I.R.B.419
1997-27
Clarified by
Rev. Proc. 2015-13, 2015-5 I.R.B.419
1997-27
Modified by
Rev. Proc. 2015-13, 2015-5 I.R.B.419
2012-11
Superseded by
Rev. Proc. 2015-17, 2015-7 I.R.B.599
2015-9
Modified by
Rev. Proc. 2015-17, 2015-7 I.R.B.599
2015-14
Modified by
Rev. Proc. 2015-20, 2015-9 I.R.B.694
2013-22
Modified by
Rev. Proc. 2015-22, 2015-11 I.R.B.754
2015-8
Modified by
Rev. Proc. 2015-22, 2015-11 I.R.B.754
2014-59
Modified by
Rev. Proc. 2015-24, 2015-13 I.R.B.822
Revenue Rulings:
92-19
Supplemented by
Rev. Rul. 2015-02, 2015-3 I.R.B.321
Notices:
2013-01
Modified by
Notice 2015-20, 2015-11 I.R.B.754
2013-01
Superseded by
Notice 2015-20, 2015-11 I.R.B.754
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2014–27 through 2014–52 is in Internal Revenue Bulletin 2014–52, dated December 28,
2014.
Bulletin No. 2015–14April 6, 2015
iii

INTERNAL REVENUE BULLETIN
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