Posts Categorized: Tax Issues

Adult Dependent Coverage – Free at Last!

in Affordable Care Act, Tax Issues

Last year and earlier this year we discussed that certain states have not conformed to the Affordable Care Act for state tax dependents.  That meant that some adult dependent health plan coverage could be taxable in those states that followed the old pre-Affordable Care Act dependent rules.  States have been quietly switching over to the new federal rules throughout this year.  Wisconsin was the last holdout.  However, last week, the Wisconsin governor signed a law adopting the federal tax treatment of adult dependents for Wisconsin state income tax purposes.  The law will take effect no later than November 18, 2011.  After… Continue Reading

Employee Reclassification Heats Up

in Tax Issues

Employee reclassification was a hot issue 10 years ago with the Microsoft and other high profile reclassification decisions.  However, recently reclassification is back in the news with two new items.  First, the DOL and IRS recently announced a “memorandum of understanding” in which they agreed to cooperate with each other in reclassification investigations.  Second, the IRS today announced a new reclassification settlement program regarding withholding taxes.  Employers should dust off their employee classifications in plan documents and SPDs to see if there is any exposure.  A link to the IRS settlement program follows. http://www.irs.gov/pub/irs-drop/a-11-64.pdf

Health Plan Excise Tax

in Affordable Care Act, Tax Issues

The Affordable Care Act added an excise tax for health plans starting for plan and policy years after September 30, 2012.  The excise tax is $1 per covered life, increasing to $2 per covered life after October 1, 2013.  Comments on how the IRS will administer and calculate the excise tax are due by September 6, 2011, as requested in Notice 2011-35, linked below. Request for Comments on Funding of Patient-Centered Outcomes Research Through Fees Payable by Issuers of Health Insurance Policies and Self-Insured Health Plan Sponsors

Form W-2 Reporting Guidnace

in Affordable Care Act, Tax Issues

This afternoon the Internal Revenue Service issued Notice 2011-28 providing interim guidance on how to report the value of employer-sponsored health coverage on Form W-2s. The requirement to report the value of health coverage will apply beginning with 2012 Forms W-2 (that is, the forms required for the calendar year 2012 that employers generally are required to furnish to employees in January 2013 and then file with the Social Security Administration). Notice 2010-69 provided a previous extension for the 2011 calendar year. The new guidnace includes special transition rules for small employers and certain types of employer-sponsored health coverage.

DOMA Enforcement

in Health Benefits, Tax Issues, Welfare Benefits

Recently, the Obama Administration indicated that it will no longer enforce the Defense of Marriage Act (DOMA).  Many employer sponsors are wondering how this affects their plans.  We are currently examining these issues and plan to issue a Legal Alert next week discussing the implications.  However, please keep in mind that DOMA does not affect ERISA preemption, so for self-insured plans, ERISA preemption is still alive and well.