Page:United States Statutes at Large Volume 100 Part 3.djvu/585

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2393

ments, shall be treated as an existing Blue Cross or Blue Shield organization. "(3) OTHER ORGANIZATIONS.—

"(A) IN GENERAL.—An organization meets the requirements of this paragraph for any taxable year if— "(i) substantially all the activities of such organization involve the providing of health insurance, "(ii) at least 10 percent of the health insurance provided by such organization is provided to individuals and small groups (not taking into account any medicare supplemental coverage), "(iii) such organization provides continuous full-year open enrollment (including conversions) for individuals and small groups, "(iv) such organization's policies covering individuals provide full coverage of pre-existing conditions of highrisk individuals without a price differential (with a reasonable waiting period), and coverage is provided without regard to age, income, or employment status of individuals under age 65, "(v) at least 35 percent of its premiums are determined on a community rated basis, and "(vi) no part of its net earnings inures to the benefit of any private shareholder or individual. "(B) SMALL GROUP DEFINED.—For purposes of subpara-

graph (A), the term 'small group' means the lesser of— "(i) 15 individuals, or "(ii) the number of individuals required for a small group under applicable State law. "(C) SPECIAL RULE FOR DETERMINING ADJUSTED SURPLUS.—

For purposes of subsection (b), the adjusted surplus of any organization meeting the requirements of this paragraph as of the beginning of the 1st taxable year for which it meets such requirements shall be its surplus as of such time." (2) CLERICAL AMENDMENT.—The table of sections for such part III is amended by adding at the end thereof the following new item: "Sec. 833. Treatment of Blue Cross and Blue Shield organizations, etc." (c) EFFECTIVE DATE.—

(1) IN GENERAL.—The amendments made by this section shall apply to taxable years beginning after December 31, 1986. (2) STUDY OF FRATERNAL BENEFICIARY ASSOCIATIONS.—The Secretary of the Treasury or his delegate shall conduct a study of organizations described in section 501(c)(8) of the Internal Revenue Code of 1986 and which received gross annual insurance premiums in excess of $25,000,000 for the taxable years of such organizations which ended during 1984. Not later than January 1, 1988, the Secretary of the Treasury shall submit to the Committee on Ways and Means of the House of Representatives, the Committee on Finance of the Senate, and the Joint Committee on Taxation the results of such study, together with such recommendations as he determines to be appropriate. The Secretary of the Treasury shall have authority to require the furnishing of such information as may be necessary to carry out the purposes of this paragraph.

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