26 U.S.C. § 9704

Liability of assigned operators

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(a) Annual premiumsEach assigned operator shall pay to the Combined Fund for each plan year beginning on or after February 1, 1993, an annual premium equal to the sum of the following three premiums—(1) the health benefit premium determined under subsection (b) for such plan year, plus(2) the death benefit premium determined under subsection (c) for such plan year, plus(3) the unassigned beneficiaries premium determined under subsection (d) for such plan year.Any related person with respect to an assigned operator shall be jointly and severally liable for any premium required to be paid by such operator.(b) Health benefit premiumFor purposes of this chapter—(1) In general

The health benefit premium for any plan year for any assigned operator shall be an amount equal to the product of the per beneficiary premium for the plan year multiplied by the number of eligible beneficiaries assigned to such operator under section 9706.

(2) Per beneficiary premiumThe Commissioner of Social Security shall calculate a per beneficiary premium for each plan year beginning on or after February 1, 1993, which is equal to the sum of—(A) the amount determined by dividing—(i) the aggregate amount of payments from the 1950 UMWA Benefit Plan and the 1974 UMWA Benefit Plan for health benefits (less reimbursements but including administrative costs) for the plan year beginning July 1, 1991, for all individuals covered under such plans for such plan year, by(ii) the number of such individuals, plus(B) the amount determined under subparagraph (A) multiplied by the percentage (if any) by which the medical component of the Consumer Price Index for the calendar year in which the plan year begins exceeds such component for 1992.(3) Adjustments for medicare reductions

If, by reason of a reduction in benefits under title XVIII of the Social Security Act, the level of health benefits under the Combined Fund would be reduced, the trustees of the Combined Fund shall increase the per beneficiary premium for the plan year in which the reduction occurs and each subsequent plan year by the amount necessary to maintain the level of health benefits which would have been provided without such reduction.

The death benefit premium for any plan year for any assigned operator shall be equal to the applicable percentage of the amount, actuarially determined, which the Combined Fund will be required to pay during the plan year for death benefits coverage described in section 9703(c).

(d) Unassigned beneficiaries premium(1) Plan years ending on or before September 30, 2006

For plan years ending on or before September 30, 2006, the unassigned beneficiaries premium for any assigned operator shall be equal to the applicable percentage of the product of the per beneficiary premium for the plan year multiplied by the number of eligible beneficiaries who are not assigned under section 9706 to any person for such plan year.

(2) Plan years beginning on or after October 1, 2006(A) In general

For plan years beginning on or after October 1, 2006, subject to subparagraph (B), there shall be no unassigned beneficiaries premium, and benefit costs with respect to eligible beneficiaries who are not assigned under section 9706 to any person for any such plan year shall be paid from amounts transferred under section 9705(b).

(B) Inadequate transfers

If, for any plan year beginning on or after October 1, 2006, the amounts transferred under section 9705(b) are less than the amounts required to be transferred to the Combined Fund under subsection (h)(2)(A) or (i) of section 402 of the Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. 1232), then the unassigned beneficiaries premium for any assigned operator shall be equal to the operator’s applicable percentage of the amount required to be so transferred which was not so transferred.

(e) Premium accounts; adjustments(1) Accounts

The trustees of the Combined Fund shall establish and maintain 3 separate accounts for each of the premiums described in subsections (b), (c), and (d). Such accounts shall be credited with the premiums received and amounts transferred under section 9705(b) and debited with expenditures allocable to such premiums.

(2) Allocations(A) Administrative expenses

Administrative costs for any plan year shall be allocated to premium accounts under paragraph (1) on the basis of expenditures (other than administrative costs) from such accounts during the preceding plan year.

(B) Interest

Interest shall be allocated to the account established for health benefit premiums.

(3) Shortfalls and surpluses(A) In general

Except as provided in subparagraph (B), if, for any plan year, there is a shortfall or surplus in any premium account, the premium for the following plan year for each assigned operator shall be proportionately reduced or increased, whichever is applicable, by the amount of such shortfall or surplus. Amounts credited to an account from amounts transferred under section 9705(b) shall not be taken into account in determining whether there is a surplus in the account for purposes of this paragraph.

(B) ExceptionSubparagraph (A) shall not apply to any surplus in the health benefit premium account or the unassigned beneficiaries premium account which is attributable to—(i) the excess of the premiums credited to such account for a plan year over the benefits (and administrative costs) debited to such account for the plan year, but such excess shall only be available for purposes of the carryover described in section 9703(b)(2)(C)(ii) (relating to carryovers of premiums not used to provide benefits), or(ii) interest credited under paragraph (2)(B) for the plan year or any preceding plan year.(C) No authority for increased payments

Nothing in this paragraph shall be construed to allow expenditures for health care benefits for any plan year in excess of the limit under section 9703(b)(2).

(f) Applicable percentageFor purposes of this section—(1) In general

The term “applicable percentage” means, with respect to any assigned operator, the percentage determined by dividing the number of eligible beneficiaries assigned under section 9706 to such operator by the total number of eligible beneficiaries assigned under section 9706 to all such operators (determined on the basis of assignments as of October 1, 1993).

(2) Annual adjustmentsIn the case of any plan year beginning on or after October 1, 1994, the applicable percentage for any assigned operator shall be redetermined under paragraph (1) by making the following changes to the assignments as of October 1, 1993:(A) Such assignments shall be modified to reflect any changes during the period beginning October 1, 1993, and ending on the last day of the preceding plan year pursuant to the appeals process under section 9706(f).(B) The total number of assigned eligible beneficiaries shall be reduced by the eligible beneficiaries of assigned operators which (and all related persons with respect to which) had ceased business (within the meaning of section 9701(c)(6)) during the period described in subparagraph (A).(C) In the case of plan years beginning on or after October 1, 2007, the total number of assigned eligible beneficiaries shall be reduced by the eligible beneficiaries whose assignments have been revoked under section 9706(h).(g) Payment of premiums(1) In general

The annual premium under subsection (a) for any plan year shall be payable in 12 equal monthly installments, due on the twenty-fifth day of each calendar month in the plan year. In the case of the plan year beginning February 1, 1993, the annual premium under subsection (a) shall be added to such premium for the plan year beginning October 1, 1993.

(2) Deductibility

Any premium required by this section shall be deductible without regard to any limitation on deductibility based on the prefunding of health benefits.

(h) Information

The trustees of the Combined Fund shall, not later than 60 days after the enactment date, furnish to the Commissioner of Social Security information as to the benefits and covered beneficiaries under the fund, and such other information as the Secretary 11 So in original. Probably should be “Commissioner”. may require to compute any premium under this section.

(i) Transition rules(1) 1988 agreement operators(A) 1st year costs

During the plan year of the Combined Fund beginning February 1, 1993, the 1988 agreement operators shall make contributions to the Combined Fund in amounts necessary to pay benefits and administrative costs of the Combined Fund incurred during such year, reduced by the amount transferred to the Combined Fund under section 9705(a) on February 1, 1993.

(B) Deficits from merged plans

During the period beginning February 1, 1993, and ending September 30, 1994, the 1988 agreement operators shall make contributions to the Combined Fund as are necessary to pay off the expenses accrued (and remaining unpaid) by the 1950 UMWA Benefit Plan and the 1974 UMWA Benefit Plan as of February 1, 1993, reduced by the assets of such plans as of such date.

If any 1988 agreement operator fails to meet any obligation under this paragraph, any contributions of such operator to the Combined Fund or any other plan described in section 404(c) shall not be deductible under this title until such time as the failure is corrected.

(D) Premium reductions(i) 1st year payments

In the case of a 1988 agreement operator making contributions under subparagraph (A), the premium of such operator under subsection (a) shall be reduced by the amount paid under subparagraph (A) by such operator for the plan year beginning February 1, 1993.

(ii) Deficit payments

In the case a 1988 agreement operator making contributions under subparagraph (B), the premium of such operator under subsection (a) shall be reduced by the amounts which are paid to the Combined Fund by reason of claims arising in connection with the 1950 UMWA Benefit Plan and the 1974 UMWA Benefit Plan as of February 1, 1993, including claims based on the “evergreen clause” found in the language of the 1950 UMWA Benefit Plan and the 1974 UMWA Benefit Plan, and which are allocated to such operator under subparagraph (E).

(iii) Limitation

Clause (ii) shall not apply to the extent the amounts paid exceed the contributions.

(iv) Plan years

Premiums under subsection (a) shall be reduced for the first plan year for which amounts described in clause (i) or (ii) are available and for any succeeding plan year until such amounts are exhausted.

(E) Allocations of contributions and refunds

Contributions under subparagraphs (A) and (B), and premium reductions under subparagraph (D)(ii), shall be made ratably on the basis of aggregate contributions made by such operators under the applicable 1988 coal wage agreements as of January 31, 1993.

(2) 1st plan yearIn the case of the plan year of the Combined Fund beginning February 1, 1993—(A) the premiums under subsections (a)(1) and (a)(3) shall be 67 percent of such premiums without regard to this paragraph, and(B) the premiums under subsection (a) shall be paid as provided in subsection (g).(3) Startup costs

The 1950 UMWA Benefit Plan and the 1974 UMWA Benefit Plan shall pay the costs of the Combined Fund incurred before February 1, 1993. For purposes of this section, such costs shall be treated as administrative expenses incurred for the plan year beginning February 1, 1993.

(j) Prepayment of premium liability(1) In generalIf—(A) a payment meeting the requirements of paragraph (3) is made to the Combined Fund by or on behalf of—(i) any assigned operator to which this subsection applies, or(ii) any related person to any assigned operator described in clause (i), and(B) the common parent of the controlled group of corporations described in paragraph (2)(B) is jointly and severally liable for any premium under this section which (but for this subsection) would be required to be paid by the assigned operator or related person,then such common parent (and no other person) shall be liable for such premium.(2) Assigned operators to which subsection applies(A) In generalThis subsection shall apply to any assigned operator if—(i) the assigned operator (or a related person to the assigned operator)—(I) made contributions to the 1950 UMWA Benefit Plan and the 1974 UMWA Benefit Plan for employment during the period covered by the 1988 agreement; and(II) is not a 1988 agreement operator,(ii) the assigned operator (and all related persons to the assigned operator) are not actively engaged in the production of coal as of July 1, 2005, and(iii) the assigned operator was, as of July 20, 1992, a member of a controlled group of corporations described in subparagraph (B).(B) Controlled group of corporations

A controlled group of corporations is described in this subparagraph if the common parent of such group is a corporation the shares of which are publicly traded on a United States exchange.

A person shall not fail to be treated as an assigned operator to which this subsection applies solely because the person ceases to be an assigned operator by reason of section 9706(h)(1) if the person otherwise meets the requirements of this subsection and is liable for the payment of premiums under section 9706(h)(3).

(D) Controlled group

For purposes of this subsection, the term “controlled group of corporations” has the meaning given such term by section 52(a).

(3) RequirementsA payment meets the requirements of this paragraph if—(A) the amount of the payment is not less than the present value of the total premium liability under this chapter with respect to the Combined Fund of the assigned operators or related persons described in paragraph (1) or their assignees, as determined by the operator’s or related person’s enrolled actuary (as defined in section 7701(a)(35)) using actuarial methods and assumptions each of which is reasonable and which are reasonable in the aggregate, as determined by such enrolled actuary;(B) such enrolled actuary files with the Secretary of Labor a signed actuarial report containing—(i) the date of the actuarial valuation applicable to the report; and(ii) a statement by the enrolled actuary signing the report that, to the best of the actuary’s knowledge, the report is complete and accurate and that in the actuary’s opinion the actuarial assumptions used are in the aggregate reasonably related to the experience of the operator and to reasonable expectations; and(C) 90 calendar days have elapsed after the report required by subparagraph (B) is filed with the Secretary of Labor, and the Secretary of Labor has not notified the assigned operator in writing that the requirements of this paragraph have not been satisfied.(4) Use of prepaymentThe Combined Fund shall—(A) establish and maintain an account for each assigned operator or related person by, or on whose behalf, a payment described in paragraph (3) was made,(B) credit such account with such payment (and any earnings thereon), and(C) use all amounts in such account exclusively to pay premiums that would (but for this subsection) be required to be paid by the assigned operator.Upon termination of the obligations for the premium liability of any assigned operator or related person for which such account is maintained, all funds remaining in such account (and earnings thereon) shall be refunded to such person as may be designated by the common parent described in paragraph (1)(B).(Added Pub. L. 102–486, title XIX, § 19143(a), Oct. 24, 1992, 106 Stat. 3042; amended Pub. L. 103–296, title I, § 108(h)(9)(A), Aug. 15, 1994, 108 Stat. 1487; Pub. L. 109–432, div. C, title II, §§ 211(a), 212(a)(2), Dec. 20, 2006, 120 Stat. 3020, 3024; Pub. L. 115–141, div. U, title IV, § 401(a)(344), Mar. 23, 2018, 132 Stat. 1200.)Editorial NotesReferences in Text

The Social Security Act, referred to in subsec. (b)(3), is act Aug. 14, 1935, ch. 531, 49 Stat. 620. Title XVIII of the Act is classified generally to subchapter XVIII (§ 1395 et seq.) of chapter 7 of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see section 1305 of Title 42 and Tables.

Amendments

2018—Subsec. (d)(2)(B). Pub. L. 115–141 substituted “1232),” for “1232)),”.

2006—Subsec. (d). Pub. L. 109–432, § 212(a)(2)(A), reenacted heading without change and amended text of subsec. (d) generally. Prior to amendment, text read as follows: “The unassigned beneficiaries premium for any plan year for any assigned operator shall be equal to the applicable percentage of the product of the per beneficiary premium for the plan year multiplied by the number of eligible beneficiaries who are not assigned under section 9706 to any person for such plan year.”

Subsec. (e)(1). Pub. L. 109–432, § 212(a)(2)(B)(i), inserted “and amounts transferred under section 9705(b)” after “premiums received”.

Subsec. (e)(3)(A). Pub. L. 109–432, § 212(a)(2)(B)(ii), inserted at end “Amounts credited to an account from amounts transferred under section 9705(b) shall not be taken into account in determining whether there is a surplus in the account for purposes of this paragraph.”

Subsec. (f)(2)(C). Pub. L. 109–432, § 212(a)(2)(C), added subpar. (C).

Subsec. (j). Pub. L. 109–432, § 211(a), added subsec. (j).

1994—Subsecs. (b)(2), (h). Pub. L. 103–296 substituted “Commissioner of Social Security” for “Secretary of Health and Human Services”.

Statutory Notes and Related SubsidiariesEffective Date of 2006 Amendment

Pub. L. 109–432, div. C, title II, § 212(a)(4), Dec. 20, 2006, 120 Stat. 3025, provided that: “The amendments made by this subsection [amending this section and sections 9705 and 9706 of this title] shall apply to plan years of the Combined Fund beginning after September 30, 2006.”

Effective Date of 1994 Amendment

Amendment by Pub. L. 103–296 effective Mar. 31, 1995, see section 110(a) of Pub. L. 103–296, set out as a note under section 401 of Title 42, The Public Health and Welfare.

Notes of Decisions

Cited in 71 cases (1 in the last 5 years), 1993–2022 · leading case: A. T. Massey Coal Co v. Holland

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A. T. Massey Coal Co v. Holland (2007) ca4 · cites it 32× “See 26 U.S.C. § 9704 (b)(2). The parties commenced these actions — the most recent skirmishes in a long-running fight — to resolve whether "reimbursements" as used in the formula includes the total payments that Medicare made to the 1950 and 1974 Benefit Plans for the base year…”

Eastern Enterprises v. Apfel (1998) scotus · cites it 4× “See 26 U. S. C. §§ 9704 (a) and (b) (directing liable operators to pay annual premiums as computed by the Commissioner); § 9707 (imposing, with limited exceptions, a penalty of $100 per day per eligible beneficiary if payment is not made in accordance with § 9704).”

United Mine Works of Am. Combined Benefit Fund v. Andre M. Toffel, for Walter Energy, Inc. (In re Walter Energy, Inc.) (2018) ca11 · cites it 4× “See 26 U.S.C. § 9704 (d)(2)(B). 3. The 1992 Benefit Plan The Coal Act also created the 1992 Benefit Plan, another new multiemployer plan.”

Holland, Michael H. v. Barnhart, Jo Anne B. (2002) cadc · cites it 4× “26 U.S.C. § 9704 (a). Under the Coal Act, the Commissioner of the Social Security Administration (“Commissioner”) must calculate, according to a specified formula, the premiums that coal operators must pay.”

Barnhart v. Peabody Coal Co. (2003) scotus · cites it 2× “" 26 U. S. C. § 9704 (f)(1). The signatory with the most assigned retirees thus would cover the greatest share of the benefits payable to the unassigned (as well as their spouses and certain dependants).”

National Coal Association v. Chater (1996) ca11 · cites it 7× “26 U.S.C. § 9704 (a). The portion of the annual premium for health benefits is calculated by the Commissioner using a formula in § 9704(b)(2), which reads in part: The Commissioner .”

Barrick Gold Exploration, Inc. v. Hudson (1993) ohsd · cites it 8× “26 U.S.C. § 9704 (i)(l)(A). The amount of this contribution is reduced by the transfer of seventy million dollars from the 1950 Pension Plan pursuant to 26 U.”

Michael Holland v. Westmoreland Coal Compan (2020) ca5 · cites it 3× “26 U.S.C. §§ 9704 (b), 9706(a)(1)–(2), 9712(d)(1)(A).”

United States Steel Corp. v. Astrue (2007) ca11 · cites it 2× “3d at 339 (citing 26 U.S.C. § 9704 (a)(1)-(3)). Any of these signatory coal operators “who ‘conducts or derives revenue from any business activity, whether or not in the coal industry,’ may be liable for those premiums.”

AJ Taft Coal Co., Inc. v. Barnhart (2003) alnd · cites it 3× “26 U.S.C. § 9704 (b)(2)(B). Once the Commissioner calculates the formula, the Trustees, as fiduciaries, bill and collect the premiums from the coal operators.”

Sidney Coal Company, Inc. v. Social Security Administration, (04-6286), Michael H. Holland, Intervenors (04-6291) (2005) ca6 · cites it 3× “26 U.S.C. § 9704 (a)(1)-(3) (explaining that the health benefit premium, the death benefit premium, and the unassigned beneficiaries premium comprise each operator’s annual premium).”

United States Pipe and Foundry Company LLC v. Michael H. Holland (2022) ca11 · cites it 5× “See 26 U.S.C. §§ 9704 (a), 9711(a), 9712(d)(1), (3).”

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