Frequently Asked Questions
Who is eligible for the Managed Care and Cost Containment Election?
Available to last signatory operators maintaining individual employer plans for coal industry retirees.
How does the Managed Care and Cost Containment Election work?
Operators can reduce their liability for retiree health benefits by electing to implement managed care and cost containment rules (such as drug formularies and provider discounts) without violating their statutory obligation to provide 'substantially the same' coverage.
What law authorizes the Managed Care and Cost Containment Election?
The Managed Care and Cost Containment Election is authorized under IRC §9711 of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §9711
Source: Internal Revenue Code, Title 26, United States Code
§ 9711. Continued obligations of individual employer plans(a) Coverage of current recipientsThe last signatory operator of any individual who, as of February 1, 1993, is receiving retiree health benefits from an individual employer plan maintained pursuant to a 1978 or subsequent coal wage agreement shall continue to provide health benefits coverage to such individual and the individual’s eligible beneficiaries which is substantially the same as (and subject to all the limitations of) the coverage provided by such plan as of January 1, 1992. Such coverage shall continue to be provided for as long as the last signatory operator (and any related person) remains in business.
(b) Coverage of eligible recipients(1) In generalThe last signatory operator of any individual who, as of February 1, 1993, is not receiving retiree health benefits under the individual employer plan maintained by the last signatory operator pursuant to a 1978 or subsequent coal wage agreement, but has met the age and service requirements for eligibility to receive benefits under such plan as of such date, shall, at such time as such individual becomes eligible to receive benefits under such plan, provide health benefits coverage to such individual and the individual’s eligible beneficiaries which is described in paragraph (2). This paragraph shall not apply to any individual who retired from the coal industry after September 30, 1994, or any eligible beneficiary of such individual.
(2) CoverageSubject to the provisions of subsection (d), health benefits coverage is described in this paragraph if it is substantially the same as (and subject to all the limitations of) the coverage provided by the individual employer plan as of January 1, 1992. Such coverage shall continue for as long as the last signatory operator (and any related person) remains in business.
(c) Joint and several liability of related persons(1) In generalExcept as provided in paragraph (2), each related person of a last signatory operator to which subsection (a) or (b) applies shall be jointly and severally liable with the last signatory operator for the provision of health care coverage described in subsection (a) or (b).
(2) Liability limited if security providedIf—(A) security meeting the requirements of paragraph (3) is provided by or on behalf of—(i) any last signatory operator which is an assigned operator described in section 9704(j)(2), or
(ii) any related person to any last signatory operator described in clause (i), and
(B) the common parent of the controlled group of corporations described in section 9704(j)(2)(B) is jointly and severally liable for the provision of health care under this section which, but for this paragraph, would be required to be provided by the last signatory operator or related person,
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