When the Affordable Care Act (ACA) was signed into law back in 2010, it directed the Centers for Medicare & Medicaid Services (CMS) to establish the Consumer Operated & Oriented Program (CO-OP).  The point of the CO-OP is to foster creation of membership-governed QNHIIs.

What’s a QNHII? you’re wondering.  It’s a qualified nonprofit health insurance issuer.  That’s something of a new concept because black letter law long held that the business of insurance couldn’t be tax exempt.  But a QNHII can, if it meets specific criteria that look much like the classic criteria for qualification under Sec. 501(c)(3) (e.g., file Form 990s, no inurement, no political campaigning, no influencing legislation).  In addition to tax exemption, a QNHII qualifies for loans and repayable grants (don’t ask the difference between a loan and a repayable grant).

The concept of a QNHII is also noteworthy because it’s reflective of the continuing erosion of the distinction between the delivery of health care services and the provision of health insurance.  For example, when health care providers accept risk contracts, they’re in effect (though not in law) getting into the insurance business.

But all these changes required IRS regulations.  Late Monday the IRS revealed the final regulations and announced that they will be published this Thursday.  The announcement has two interesting features.  First, it provides that a QNHII’s exemption will be retroactive, to the date the organization filed notice with the IRS, provided it has met the criteria during all that time.  Second, it notes that after temporary regulations were published in February 2012, only two comments were received and that the final regulations “do not incorporate these suggestions.”  (Maybe that’s why so few people commented.)