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Treasury and IRS are considering an approach under which an employer would not be
required to determine the cost of applicable coverage for employees receiving other-
than-self-only coverage based on the number of individuals covered in addition to the
employee (even if the actual cost of such coverage varied on this basis). Under this
potential approach, an employer could treat all employees who are enrolled in the same
benefit package and who receive coverage for one or more individuals in addition to the
employee as similarly situated for purposes of determining the cost of applicable
coverage for that group.
Permissive Disaggregation. For the purposes of COBRA, Treasury and IRS are
considering permitting (but not requiring) further disaggregation based on distinctions
that have traditionally been made in the group insurance market. Because the cost of
applicable coverage under § 4980I is generally determined under rules similar to the
rules applicable to COBRA, Treasury and IRS are also considering permissive
disaggregation for purposes of § 4980I. In particular, Treasury and IRS are considering
whether to provide rules for permissive disaggregation that would allow, but not require,
an employer to subdivide further the group of employees that would be treated as
similarly situated. Specifically, Treasury and IRS are considering whether
disaggregation should be permitted based on (a) a broad standard (such as limiting
permissive disaggregation to bona fide employment-related criteria, including, for
example, nature of compensation, specified job categories, collective bargaining status,
etc.) while prohibiting the use of any criterion related to an individual’s health), or (b) a
more specific standard (such as a specified list of limited specific categories for which
permissive disaggregation is allowed). A more specific standard, for example, could
permit groups of similarly situated employees enrolled in a single benefit package to be
disaggregated only into current and former employees and/or to be disaggregated
based on bona fide geographic distinctions, such as an employee’s residence in or a
business’s location in different states or metropolitan areas and/or, for an employee
receiving other-than-self-only coverage, based on the number of individuals covered in
addition to the employee (that is, different rating units).
Treasury and IRS invite comments on the potential approach described in this
section with respect to determining groups of similarly situated employees, including
areas in which additional guidance would be beneficial. With respect to the potential
approach to mandatory aggregation of employees who are enrolled in the same benefit
package, comments are requested on the extent to which benefit packages must be
identical to be considered the same for this purpose and, if differences are permitted,
the nature and extent of those permitted differences. With respect to the two potential
approaches for permissive disaggregation set out in the previous paragraph, comments
are requested on which approach is preferable. If the second approach (under which
specific criteria for permissive disaggregation are enumerated) is preferable, comments
are requested on what specific criteria should be permitted. Comments are also
requested on whether additional guidance would be beneficial under § 4980I(d)(2)(A),
which states that, for applicable coverage provided to employees, “the plan may elect to
treat a retired employee who has not attained the age of 65 and a retired employee who
has attained the age of 65 as similarly situated beneficiaries.”