IRS SETS PROCEDURE FOR OBTAINING RULINGS ON ISSUES RAISED BY THE COBRA REGULATIONS.

Rev. Proc. 87-28

SECTION 1. PURPOSE

The purpose of this Revenue Procedure is to set forth procedures for the submission of requests for rulings to the Internal Revenue Service under section 162(k) of the Internal Revenue Code.

SECTION 2. BACKGROUND

01 Section 162(k) of the Code provides, in general, that no deduction will be allowed for expenses paid or incurred by an employer for a group health plan unless each "qualified beneficiary" who would lose coverage under the plan as a result of a "qualifying event" is entitled to elect, within a specified period, continuation coverage under the plan. In addition, sections 601 through 609 of the Employee Retirement Income Security Act of 1974 ("ERISA") require that continuation coverage be provided under group health plans to certain individuals.

02 Proposed regulations under section 162(k) were published on June 15, 1987. Those proposed regulations addressed issues other than those concerning the cost of providing continuation coverage.

03 The Service expects to issue additional guidance under section 162(k). Such guidance may include the following:

(1) additional proposed regulations, relating to the computation of the cost of providing continuation coverage;

(2) model plan language applicable to several statutory provisions, including section 162(k)(2)(B)(iii), relating to failure to pay premium; section 162(k)(5)(A), relating to election period; section 162(k)(5)(B), relating to effect of election on other beneficiaries; and section 162(k)(7), relating to various definitions; and

(3) revenue rulings under other provisions of section 162(k).

SECTION 3. RULINGS ISSUED BY THE NATIONAL OFFICE

01 In general, the National Office will issue rulings under section 162(k) only to sponsors of group health plans.

02 The National Office will not issue a ruling with respect to an issue that is clearly and adequately addressed by statute, regulations, revenue rulings or revenue procedures.

03 In cases described in subsection 02, and in the case of requests submitted by persons other than plan sponsors, the National Office will respond to the ruling request with a general information letter which either indicates the Service's position with respect to the issue addressed in the ruling request or directs the taxpayer to published guidance relevant to the issue.

04 Requests for rulings relating to the computation of the cost of providing continuation coverage will not be accepted at this time. Guidance on such rulings will be provided after proposed regulations on the subject have been published.

05 The Service does not plan to issue private rulings on the meaning of "gross misconduct" for purposes of section 162(k)(3)(B).

SECTION 4. INSTRUCTIONS TO TAXPAYERS

01 A request for a ruling letter concerning section 162(k) by the National Office should be sent to the Internal Revenue Service, Associate Chief Counsel (Technical and International), Attention: CC:EE, Washington, DC 20224.

02 The Director, Employee Plans and Exempt Organizations division, has primary responsibility for providing basic principles for uniform interpretation and application of section 162(k).

03 In all other respects, except where the context manifestly requires otherwise, the provisions of Rev. Proc. 87-1, 1987-1 I.R.B. 7, apply to request for rulings under section 162(k).

SECTION 5. EFFECTIVE DATE

The National Office will begin processing requests for rulings under section 162(k) as of the 30th day following the publication of the model plan language described in section 2.03(2) above. Requests for such rulings should not be submitted before that date.