SECTION 2. BACKGROUND

Section 1322 of the Affordable Care Act requires the Department of Health and Human Services (HHS) to establish the Consumer Operated and Oriented Plan program (CO-OP program). The purpose of the CO-OP program is to foster the creation of qualified nonprofit health insurance issuers to offer qualified health plans in individual and small group markets. The CO-OP program will make available to qualified nonprofit health insurance issuers loans to provide assistance in meeting start-up costs and/or repayable grants to provide assistance in meeting any state solvency requirements. HHS has published a request for comments regarding the CO-OP program. See Planning and Establishment of Consumer Operated and Oriented Plan Program; Request for Comments Regarding Provisions of Consumer Operated and Oriented Plan Program, 76 Fed. Reg. 5774 (Feb. 2, 2011).

Section 1322(h) of the Affordable Care Act added § 501(c)(29) to the Code. Section 501(c)(29) sets out rules for tax-exemption under § 501(a) of the Code for a qualified nonprofit health insurance issuer that has received a grant or loan under the CO-OP program.