An IRS compensation rule aimed at health insurers could actually
apply to a wide range of companies.
It is well known that the Patient Protection and Affordable Care
Act (PPACA, or the federal health-care reform law) significantly
limits the ability of health-insurance companies to deduct payment
of compensation beginning in 2013. What is not so well known is
that the Internal Revenue Service might apply this limitation to
health-care services providers that are not typically considered to
be insurance companies, to captive insurance companies, and even to
companies outside the health-insurance industry.
The articulated rationale of the congressional sponsors of this
tax-deduction limitation was fairly straightforward. It was widely
anticipated that health-insurance companies would realize
significant increases in revenue due to the PPACA's individual
mandate to obtain health insurance. Fearing that a significant
portion of this revenue increase would be used to
