skip navigation

Search Help
Navigation Help

Topic Index
ABCDEFGHI
JKLMNOPQR
STUVWXYZ#

Affordable Care Act
Tax Topic Index

International
Tax Topic Index

FAQs
Forms
Publications
Tax Topics

Comments
About Tax Map

IRS.gov Website
Publication 557
taxmap/pubs/p557-020.htm#en_us_publink1000200091

Organizations Providing Insurance(p28)

rule
An organization described in sections 501(c)(3) or 501(c)(4) may be exempt from tax only if no substantial part of its activities consists of providing commercial-type insurance.
However, this rule does not apply to state-sponsored organizations described in sections 501(c)(26) or 501(c)(27), which are discussed in chapter 4, or to charitable risk pools, discussed next.
taxmap/pubs/p557-020.htm#en_us_publink1000200092

Charitable Risk Pools(p28)

rule
A charitable risk pool is treated as organized and operated exclusively for charitable purposes if it:
  1. Is organized and operated only to pool insurable risks of its members (not including risks related to medical malpractice) and to provide information to its members about loss control and risk management,
  2. Consists only of members that are section 501(c)(3) organizations exempt from tax under section 501(a),
  3. Is organized under state law authorizing this type of risk pooling,
  4. Is exempt from state income tax (or will be after qualifying as a section 501(c)(3) organization),
  5. Has obtained at least $1,000,000 in startup capital from nonmember charitable organizations,
  6. Is controlled by a board of directors elected by its members, and
  7. Is organized under documents requiring that:
    1. Each member be a section 501(c)(3) organization exempt from tax under section 501(a),
    2. Each member that receives a final determination that it no longer qualifies under section 501(c)(3) notify the pool immediately, and
    3. Each insurance policy issued by the pool provide that it will not cover events occurring after a final determination described in (b).