4098 / What is the additional reserve for medical benefits of bona fide association plans?

For tax years beginning after December 31, 2006, an applicable account limit for any taxable year may include a reserve in an amount not to exceed 35 percent of the sum of the qualified direct costs and the change in claims incurred but unpaid for such taxable year with respect to medical benefits other than post-retirement medical benefits. For this purpose, applicable account limit means an account limit for a qualified asset account with respect to medical benefits provided through a plan maintained by a bona fide association as defined in Section 2791(d)(3) of the Public Health Service Act.¹

In determining an employer’s deduction, no item may be taken into account more than once.²

1. 42 USC 300gg-91(d)(3). IRC § 419A(c)(6), as added by PPA 2006.