Internal Revenue Code:Sec. 9704. Liability of assigned operators
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Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle J - Coal Industry Health Benefits
CHAPTER 99 - COAL INDUSTRY HEALTH BENEFITS
Subchapter B - Combined Benefit Fund
PART II - FINANCING
Statute
Sec. 9704. Liability of assigned operators
(a) Annual premiums
Each assigned operator shall pay to the Combined Fund for each
plan year beginning on or after February 1, 1993, an annual premium
equal to the sum of the following three premiums -
(1) the health benefit premium determined under subsection (b)
for such plan year, plus
(2) the death benefit premium determined under subsection (c)
for such plan year, plus
(3) the unassigned beneficiaries premium determined under
subsection (d) for such plan year.
Any related person with respect to an assigned operator shall be
jointly and severally liable for any premium required to be paid by
such operator.
(b) Health benefit premium
For purposes of this chapter -
(1) In general
The health benefit premium for any plan year for any assigned
operator shall be an amount equal to the product of the per
beneficiary premium for the plan year multiplied by the number of
eligible beneficiaries assigned to such operator under section
9706.
(2) Per beneficiary premium
The Commissioner of Social Security shall calculate a per
beneficiary premium for each plan year beginning on or after
February 1, 1993, which is equal to the sum of -
(A) the amount determined by dividing -
(i) the aggregate amount of payments from the 1950 UMWA
Benefit Plan and the 1974 UMWA Benefit Plan for health
benefits (less reimbursements but including administrative
costs) for the plan year beginning July 1, 1991, for all
individuals covered under such plans for such plan year, by
(ii) the number of such individuals, plus
(B) the amount determined under subparagraph (A) multiplied
by the percentage (if any) by which the medical component of
the Consumer Price Index for the calendar year in which the
plan year begins exceeds such component for 1992.
(3) Adjustments for medicare reductions
If, by reason of a reduction in benefits under title XVIII of
the Social Security Act, the level of health benefits under the
Combined Fund would be reduced, the trustees of the Combined Fund
shall increase the per beneficiary premium for the plan year in
which the reduction occurs and each subsequent plan year by the
amount necessary to maintain the level of health benefits which
would have been provided without such reduction.
(c) Death benefit premium
The death benefit premium for any plan year for any assigned
operator shall be equal to the applicable percentage of the amount,
actuarially determined, which the Combined Fund will be required to
pay during the plan year for death benefits coverage described in
section 9703(c).
(d) Unassigned Beneficiaries Premium.--
(1) Plan years ending on or before september 30, 2006.--
For plan years ending on or before September 30, 2006, the
unassigned beneficiaries premium for any assigned operator shall
be equal to the applicable percentage of the product of the per
beneficiary premium for the plan year multiplied by the number
of eligible beneficiaries who are not assigned under section
9706 to any person for such plan year.
(2) Plan years beginning on or after october 1, 2006.--
(A) In general.--For plan years beginning on or
after October 1, 2006, subject to subparagraph (B),
there shall be no unassigned beneficiaries premium, and
benefit costs with respect to eligible beneficiaries who
are not assigned under section 9706 to any person for
any such plan year shall be paid from amounts
transferred under section 9705(b).
(B) Inadequate transfers.--If, for any plan year
beginning on or after October 1, 2006, the amounts
transferred under section 9705(b) are less than the
amounts required to be transferred to the Combined Fund
under subsection (h)(2)(A) or (i) of section 402 of the
Surface Mining Control and Reclamation Act of 1977 (30
U.S.C. 1232)), then the unassigned beneficiaries premium
for any assigned operator shall be equal to the
operator's applicable percentage of the amount required
to be so transferred which was not so transferred.
(e) Premium accounts; adjustments
(1) Accounts
The trustees of the Combined Fund shall establish and maintain
3 separate accounts for each of the premiums described in
subsections (b), (c), and (d). Such accounts shall be credited
with the premiums received and amounts transferred under section
9705(b) and debited with expenditures allocable to such premiums.
(2) Allocations
(A) Administrative expenses
Administrative costs for any plan year shall be allocated to
premium accounts under paragraph (1) on the basis of
expenditures (other than administrative costs) from such
accounts during the preceding plan year.
(B) Interest
Interest shall be allocated to the account established for
health benefit premiums.
(3) Shortfalls and surpluses
(A) In general
Except as provided in subparagraph (B), if, for any plan
year, there is a shortfall or surplus in any premium account,
the premium for the following plan year for each assigned
operator shall be proportionately reduced or increased,
whichever is applicable, by the amount of such shortfall or
surplus. Amounts credited to an account from amounts transferred
under section 9705(b) shall not be taken into account in determining
whether there is a surplus in the account for purposes of this paragraph.
(B) Exception
Subparagraph (A) shall not apply to any surplus in the health
benefit premium account or the unassigned beneficiaries premium
account which is attributable to -
(i) the excess of the premiums credited to such account for
a plan year over the benefits (and administrative costs)
debited to such account for the plan year, but such excess
shall only be available for purposes of the carryover
described in section 9703(b)(2)(C)(ii) (relating to
carryovers of premiums not used to provide benefits), or
(ii) interest credited under paragraph (2)(B) for the plan
year or any preceding plan year.
(C) No authority for increased payments
Nothing in this paragraph shall be construed to allow
expenditures for health care benefits for any plan year in
excess of the limit under section 9703(b)(2).
(f) Applicable percentage
For purposes of this section -
(1) In general
The term ''applicable percentage'' means, with respect to any
assigned operator, the percentage determined by dividing the
number of eligible beneficiaries assigned under section 9706 to
such operator by the total number of eligible beneficiaries
assigned under section 9706 to all such operators (determined on
the basis of assignments as of October 1, 1993).
(2) Annual adjustments
In the case of any plan year beginning on or after October 1,
1994, the applicable percentage for any assigned operator shall
be redetermined under paragraph (1) by making the following
changes to the assignments as of October 1, 1993:
(A) Such assignments shall be modified to reflect any changes
during the period beginning October 1, 1993, and ending on the
last day of the preceding plan year pursuant to the appeals
process under section 9706(f).
(B) The total number of assigned eligible beneficiaries shall
be reduced by the eligible beneficiaries of assigned operators
which (and all related persons with respect to which) had
ceased business (within the meaning of section 9701(c)(6))
during the period described in subparagraph (A).
(C) In the case of plan years beginning on or
after October 1, 2007, the total number of assigned
eligible beneficiaries shall be reduced by the eligible
beneficiaries whose assignments have been revoked under
section 9706(h).
(g) Payment of premiums
(1) In general
The annual premium under subsection (a) for any plan year shall
be payable in 12 equal monthly installments, due on the
twenty-fifth day of each calendar month in the plan year. In the
case of the plan year beginning February 1, 1993, the annual
premium under subsection (a) shall be added to such premium for
the plan year beginning October 1, 1993.
(2) Deductibility
Any premium required by this section shall be deductible
without regard to any limitation on deductibility based on the
prefunding of health benefits.
(h) Information
The trustees of the Combined Fund shall, not later than 60 days
after the enactment date, furnish to the Commissioner of Social
Security information as to the benefits and covered beneficiaries
under the fund, and such other information as the Secretary
(FOOTNOTE 1) may require to compute any premium under this section.
(FOOTNOTE 1) So in original. Probably should be
''Commissioner''.
(i) Transition rules
(1) 1988 agreement operators
(A) 1st year costs
During the plan year of the Combined Fund beginning February
1, 1993, the 1988 agreement operators shall make contributions
to the Combined Fund in amounts necessary to pay benefits and
administrative costs of the Combined Fund incurred during such
year, reduced by the amount transferred to the Combined Fund
under section 9705(a) on February 1, 1993.
(B) Deficits from merged plans
During the period beginning February 1, 1993, and ending
September 30, 1994, the 1988 agreement operators shall make
contributions to the Combined Fund as are necessary to pay off
the expenses accrued (and remaining unpaid) by the 1950 UMWA
Benefit Plan and the 1974 UMWA Benefit Plan as of February 1,
1993, reduced by the assets of such plans as of such date.
(C) Failure
If any 1988 agreement operator fails to meet any obligation
under this paragraph, any contributions of such operator to the
Combined Fund or any other plan described in section 404(c)
shall not be deductible under this title until such time as the
failure is corrected.
(D) Premium reductions
(i) 1st year payments
In the case of a 1988 agreement operator making
contributions under subparagraph (A), the premium of such
operator under subsection (a) shall be reduced by the amount
paid under subparagraph (A) by such operator for the plan
year beginning February 1, 1993.
(ii) Deficit payments
In the case a 1988 agreement operator making contributions
under subparagraph (B), the premium of such operator under
subsection (a) shall be reduced by the amounts which are paid
to the Combined Fund by reason of claims arising in
connection with the 1950 UMWA Benefit Plan and the 1974 UMWA
Benefit Plan as of February 1, 1993, including claims based
on the ''evergreen clause'' found in the language of the 1950
UMWA Benefit Plan and the 1974 UMWA Benefit Plan, and which
are allocated to such operator under subparagraph (E).
(iii) Limitation
Clause (ii) shall not apply to the extent the amounts paid
exceed the contributions.
(iv) Plan years
Premiums under subsection (a) shall be reduced for the
first plan year for which amounts described in clause (i) or
(ii) are available and for any succeeding plan year until
such amounts are exhausted.
(E) Allocations of contributions and refunds
Contributions under subparagraphs (A) and (B), and premium
reductions under subparagraph (D)(ii), shall be made ratably on
the basis of aggregate contributions made by such operators
under the applicable 1988 coal wage agreements as of January
31, 1993.
(2) 1st plan year
In the case of the plan year of the Combined Fund beginning
February 1, 1993 -
(A) the premiums under subsections (a)(1) and (a)(3) shall be
67 percent of such premiums without regard to this paragraph,
and
(B) the premiums under subsection (a) shall be paid as
provided in subsection (g).
(3) Startup costs
The 1950 UMWA Benefit Plan and the 1974 UMWA Benefit Plan shall
pay the costs of the Combined Fund incurred before February 1,
1993. For purposes of this section, such costs shall be treated
as administrative expenses incurred for the plan year beginning
February 1, 1993.
(j) Prepayment of Premium Liability.--
(1) In general.--If--
(A) a payment meeting the requirements of
paragraph (3) is made to the Combined Fund by or on
behalf of--
(i) any assigned operator to which this
subsection applies, or
(ii) any related person to any assigned
operator described in clause (i), and
(B) the common parent of the controlled group of
corporations described in paragraph (2)(B) is jointly
and severally liable for any premium under this section
which (but for this subsection) would be required to be
paid by the assigned operator or related person,
then such common parent (and no other person) shall be liable
for such premium.
(2) Assigned operators to which subsection applies.--
(A) In general.--This subsection shall apply to
any assigned operator if--
(i) the assigned operator (or a related
person to the assigned operator)--
(I) made contributions to the 1950
UMWA Benefit Plan and the 1974 UMWA
Benefit Plan for employment during the
period covered by the 1988 agreement;
and
(II) is not a 1988 agreement
operator,
(ii) the assigned operator (and all related
persons to the assigned operator) are not actively
engaged in the production of coal as of July 1,
2005, and
(iii) the assigned operator was, as of July
20, 1992, a member of a controlled group of
corporations described in subparagraph (B).
(B) Controlled group of corporations.--A
controlled group of corporations is described in this
subparagraph if the common parent of such group is a
corporation the shares of which are publicly traded on a
United States exchange.
(C) Coordination with repeal of assignments.--A
person shall not fail to be treated as an assigned
operator to which this subsection applies solely because
the person ceases to be an assigned operator by reason
of section 9706(h)(1) if the person otherwise meets the
requirements of this subsection and is liable for the
payment of premiums under section 9706(h)(3).
(D) Controlled group.--For purposes of this
subsection, the term `controlled group of corporations'
has the meaning given such term by section 52(a).
(3) Requirements.--A payment meets the requirements of
this paragraph if--
(A) the amount of the payment is not less than the
present value of the total premium liability under this
chapter with respect to the Combined Fund of the
assigned operators or related persons described in
paragraph (1) or their assignees, as determined by the
operator's or related person's enrolled actuary (as
defined in section 7701(a)(35)) using actuarial methods
and assumptions each of which is reasonable and which
are reasonable in the aggregate, as determined by such
enrolled actuary;
(B) such enrolled actuary files with the Secretary
of Labor a signed actuarial report containing--
(i) the date of the actuarial valuation
applicable to the report; and
(ii) a statement by the enrolled actuary
signing the report that, to the best of the
actuary's knowledge, the report is complete and
accurate and that in the actuary's opinion the
actuarial assumptions used are in the aggregate
reasonably related to the experience of the
operator and to reasonable expectations; and
(C) 90 calendar days have elapsed after the report
required by subparagraph (B) is filed with the Secretary
of Labor, and the Secretary of Labor has not notified
the
assigned operator in writing that the requirements of
this paragraph have not been satisfied.
(4) Use of prepayment.--The Combined Fund shall--
(A) establish and maintain an account for each
assigned operator or related person by, or on whose
behalf, a payment described in paragraph (3) was made,
(B) credit such account with such payment (and any
earnings thereon), and
(C) use all amounts in such account exclusively to
pay premiums that would (but for this subsection) be
required to be paid by the assigned operator.
Upon termination of the obligations for the premium liability of
any assigned operator or related person for which such account
is maintained, all funds remaining in such account (and earnings
thereon) shall be refunded to such person as may be designated
by the common parent described in paragraph (1)(B).
Sources
(Added Pub. L. 102-486, title XIX, Sec. 19143(a), Oct. 24, 1992,
106 Stat. 3042; amended Pub. L. 103-296, title I, Sec.
108(h)(9)(A), Aug. 15, 1994, 108 Stat. 1487.)
References in Text
REFERENCES IN TEXT
The Social Security Act, referred to in subsec. (b)(3), is act
Aug. 14, 1935, ch. 531, 49 Stat. 620, as amended. Title XVIII of
the Act is classified generally to subchapter XVIII (Sec. 1395 et
seq.) of chapter 7 of Title 42, The Public Health and Welfare. For
complete classification of this Act to the Code, see section 1305
of Title 42 and Tables.
Miscellaneous
AMENDMENTS
2006 - Tax Relief and Health Care Act of 2006 (P.L. 109-432)
Section 212(a)(2) Modifications of premiums to reflect federal
transfers.--
(A) Elimination of unassigned beneficiaries pre-
mium.--Section 9704(d) of such Code <<NOTE: 26 USC
9704.>> (establishing unassigned beneficiaries premium)
is amended to read as follows:
``(d) Unassigned Beneficiaries Premium.--
``(1) Plan years ending on or before september 30, 2006.--
For plan years ending on or before September 30, 2006, the
unassigned beneficiaries premium for any assigned operator shall
be equal to the applicable percentage of the product of the per
beneficiary premium for the plan year multiplied by the number
of eligible beneficiaries who are not assigned under section
9706 to any person for such plan year.
``(2) Plan years beginning on or after october 1, 2006.--
``(A) In general.--For plan years beginning on or
after October 1, 2006, subject to subparagraph (B),
there shall be no unassigned beneficiaries premium, and
benefit costs with respect to eligible beneficiaries who
are not assigned under section 9706 to any person for
any such plan year shall be paid from amounts
transferred under section 9705(b).
``(B) Inadequate transfers.--If, for any plan year
beginning on or after October 1, 2006, the amounts
transferred under section 9705(b) are less than the
amounts required to be transferred to the Combined Fund
under subsection (h)(2)(A) or (i) of section 402 of the
Surface Mining Control and Reclamation Act of 1977 (30
U.S.C. 1232)), then the unassigned beneficiaries premium
for any assigned operator shall be equal to the
operator's applicable percentage of the amount required
to be so transferred which was not so transferred.''.
(B) Premium accounts.--
(i) Crediting of accounts.--Section 9704(e)(1)
of such Code (relating to premium accounts;
adjustments) is amended by inserting ``and amounts
transferred under section 9705(b)'' after
``premiums received''.
(ii) Surpluses attributable to public
funding.--Section 9704(e)(3)(A) of such Code is
amended by adding at the end the following new
sentence: ``Amounts credited to an account from
amounts transferred under section 9705(b) shall
not be taken into account in determining whether
there is a surplus in the account for purposes of
this paragraph.''.
(C) Applicable percentage.--Section 9704(f)(2) of
such Code (relating to annual adjustments) is amended by
adding at the end the following new subparagraph:
``(C) In the case of plan years beginning on or
after October 1, 2007, the total number of assigned
eligible beneficiaries shall be reduced by the eligible
beneficiaries whose assignments have been revoked under
section 9706(h).''.
2006 - Tax Relief and Health Care Act of 2006 (P.L. 109-432)
SEC. 211. CERTAIN RELATED PERSONS AND SUCCESSORS IN INTEREST RELIEVED OF
LIABILITY IF PREMIUMS PREPAID.
(a) Combined Benefit Fund.--Section 9704 of the Internal Revenue
Code of 1986 <<NOTE: 26 USC 9704.>> (relating to liability of assigned
operators) is amended by adding at the end the following new subsection:
``(j) Prepayment of Premium Liability.--
``(1) In general.--If--
``(A) a payment meeting the requirements of
paragraph (3) is made to the Combined Fund by or on
behalf of--
``(i) any assigned operator to which this
subsection applies, or
``(ii) any related person to any assigned
operator described in clause (i), and
``(B) the common parent of the controlled group of
corporations described in paragraph (2)(B) is jointly
and severally liable for any premium under this section
which (but for this subsection) would be required to be
paid by the assigned operator or related person,
then such common parent (and no other person) shall be liable
for such premium.
``(2) Assigned operators to which subsection applies.--
``(A) In general.--This subsection shall apply to
any assigned operator if--
``(i) the assigned operator (or a related
person to the assigned operator)--
``(I) made contributions to the 1950
UMWA Benefit Plan and the 1974 UMWA
Benefit Plan for employment during the
period covered by the 1988 agreement;
and
``(II) is not a 1988 agreement
operator,
``(ii) the assigned operator (and all related
persons to the assigned operator) are not actively
engaged in the production of coal as of July 1,
2005, and
``(iii) the assigned operator was, as of July
20, 1992, a member of a controlled group of
corporations described in subparagraph (B).
``(B) Controlled group of corporations.--A
controlled group of corporations is described in this
subparagraph if the common parent of such group is a
corporation the shares of which are publicly traded on a
United States exchange.
``(C) Coordination with repeal of assignments.--A
person shall not fail to be treated as an assigned
operator to which this subsection applies solely because
the person ceases to be an assigned operator by reason
of section 9706(h)(1) if the person otherwise meets the
requirements of this subsection and is liable for the
payment of premiums under section 9706(h)(3).
``(D) Controlled group.--For purposes of this
subsection, the term `controlled group of corporations'
has the meaning given such term by section 52(a).
``(3) Requirements.--A payment meets the requirements of
this paragraph if--
``(A) the amount of the payment is not less than the
present value of the total premium liability under this
chapter with respect to the Combined Fund of the
assigned operators or related persons described in
paragraph (1) or their assignees, as determined by the
operator's or related person's enrolled actuary (as
defined in section 7701(a)(35)) using actuarial methods
and assumptions each of which is reasonable and which
are reasonable in the aggregate, as determined by such
enrolled actuary;
``(B) such enrolled actuary files with the Secretary
of Labor a signed actuarial report containing--
``(i) the date of the actuarial valuation
applicable to the report; and
``(ii) a statement by the enrolled actuary
signing the report that, to the best of the
actuary's knowledge, the report is complete and
accurate and that in the actuary's opinion the
actuarial assumptions used are in the aggregate
reasonably related to the experience of the
operator and to reasonable expectations; and
``(C) 90 calendar days have elapsed after the report
required by subparagraph (B) is filed with the Secretary
of Labor, and the Secretary of Labor has not notified
the
assigned operator in writing that the requirements of
this paragraph have not been satisfied.
``(4) Use of prepayment.--The Combined Fund shall--
``(A) establish and maintain an account for each
assigned operator or related person by, or on whose
behalf, a payment described in paragraph (3) was made,
``(B) credit such account with such payment (and any
earnings thereon), and
``(C) use all amounts in such account exclusively to
pay premiums that would (but for this subsection) be
required to be paid by the assigned operator.
Upon termination of the obligations for the premium liability of
any assigned operator or related person for which such account
is maintained, all funds remaining in such account (and earnings
thereon) shall be refunded to such person as may be designated
by the common parent described in paragraph (1)(B).''.
1994 - Subsecs. (b)(2), (h). Pub. L. 103-296 substituted
''Commissioner of Social Security'' for ''Secretary of Health and
Human Services''.
EFFECTIVE DATE OF 2006 AMENDMENT
2006 - Tax Relief and Health Care Act of 2006 (P.L. 109-432)
Section 212(a)(4) <<NOTE: 26 USC 9704 note.>> Effective date.--The
amendments made by this subsection shall apply to plan years of
the Combined Fund beginning after September 30, 2006.
EFFECTIVE DATE OF 1994 AMENDMENT
Amendment by Pub. L. 103-296 effective Mar. 31, 1995, see section
110(a) of Pub. L. 103-296, set out as a note under section 401 of
Title 42, The Public Health and Welfare.
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 9703, 9705, 9706, 9707 of
this title; title 30 section 1232.
