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501(c)(27)
501(c)(27) is an Internal Revenue Service (IRS) tax exemption status that applies to state-sponsored workers' compensation reinsurance organizations.[1] 501(c)(27) organizations are classified as either 501(c)(27)(A) or 501(c)(27)(B), depending on their date of organization.
501(c)(27)(A) entities were established before June 1, 1997. These organizations work to reimburse members for the costs associated with providing workers' compensation insurance. Every organization in the state that self-insures or provides workers' compensation insurance must be a member of the 501(c)(27)(A). These organizations "operate as nonprofit organization[s] by returning surplus income to members or workers' compensation policyholders on a periodic basis and by reducing initial premiums in anticipation of investment income."[1]
501(c)(27)(B) entities must be established after December 1, 1997. These organizations are created by state law for the specific purpose of providing workers' compensation insurance. 501(c)(27)(B) organizations are financially supported by the state, either through full faith and credit or operating capital. All assets of the organization must revert to the state upon dissolution or the state must prohibit the organization from dissolving.[1]
Examples
- Workers Compensation Reinsurance Association (Saint Paul, Minn.)
- Texas Workers Compensation (Austin, Texas)
- Chesapeake Employees Insurance Company (Baltimore, Md.)[2]
See also
External links
Footnotes
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