PUBLIC LAW 100-647—NOV. 10, 1988

102 STAT. 3625

(3) Section-162 of the 1986 Code is amended by striking out
subsection (k) and by redesignating—

(A) the subsection relating to stock redemption expenses
as subsection (k),

(B) the subsection relating to special rules for health
insurance costs of self-employed individuals as subsection
(1), and

(C) the subsection relating to cross references as subsec-
tion (m).

(4) Subparagraph (C) of section 414(n)(3) of the 1986 Code, as
amended by section lllB(a) of this Act, is amended by striking
out '162(1X2), 162(k)(2)," and by striking out "and 505" and
inserting in lieu thereof "505, and 4980B".

(5) Paragraph (2) of section 414(t) of the 1986 Code, as
amended by section lllB(a) of this Act, is amended by striking
out "1620X2), 162(k)(2)/' and by striking out "or 505" and insert-
ing in lieu thereof "505, or 4980B".

(6) Paragraph (1) of section 607 of the Employee Retirement

Income Security Act of 1974 is amended by striking out "section 29 use 1167
162(i)(3) of the Internal Revenue Code of 1954" and inserting in
lieu thereof "section 162(i)(2) of the Internal Revenue Code of
1986".

(7) Paragraph (1) of section 2208 of the Public Health Service

Act is amended by striking out "section 162(i)(3) of the Internal 42 use 300bb-8.
Revenue Code of 1954" and inserting in lieu thereof "section
162(1X2) of the Internal Revenue Code of 1986".

(c) CLERICAL AMENDMENT.—The table of sections for chapter 43 of
the 1986 Code is amended by adding at the end thereof the following
new item:

"Sec. 4980B. Failure to satisfy continuation coverage requirements of group
health plans."

(d) EFFECTIVE DATE.—The amendments made by this section shall 26 use 162 note.
apply to taxable years beginning after December 31, 1988, but shall

not apply to any plan for any plan year to which section 162(k) of
the Internal Revenue Code of 1986 (as in effect on the day before the
date of the enactment of this Act) did not apply by reason of section
10001(e)(2) of the Consolidated Omnibus Budget Reconciliation Act
of 1985.

Subtitle C—Employee Benefit
Nondiserimination Rules

SEC. 3021. MODIFICATIONS TO DISCRIMINATION RULES APPLICABLE TO
CERTAIN EMPLOYEE BENEFIT PLANS.

(a) MODIFICATIONS TO SECTION 89.—

(1) DETERMINATIONS BASED ON TESTING YEAR.—

(A) Section 89 of the 1986 Code (as amended by title I) is
amended by striking out "plan year" each place it appears
and inserting in lieu thereof "testing year".

(B) Subsection (j) of section 89 of the 1986 Code is
amended by adding at the end thereof the following new
paragraph:

"(13) TESTING YEAR.—The term 'testing year' means—

"(A) any 12-month period beginning with the calendar
month designated in the plan for purposes of this section, or