e3 Financial News Archive For March / April 2011
Adult Dependent Taxation in California Update
Apr 14, 2011
AB 36 Eliminating the Tax Has Been Signed Into Law By Governor Brown
California employers can breathe a collective sigh of relief. Governor Brown has signed AB36, thereby eliminating the imputed income tax applied to healthcare coverage and payments for adult dependents. This law conforms California tax rules to Federal tax rules implemented in connection with Health Care Reform. The law takes effect immediately, and retroactively to the 2010 implementation of Health Care Reform.
IRS Delays Smaller-Employer Deadline to Report Insurance Costs on W-2s
Mar 31, 2011
Under the reform law, employers were required to provide health care cost information on 2011 W-2 statements that are distributed to employees in 2012. But last year, the IRS waived that requirement for 2011 and said the health care cost reporting requirement would apply to 2012 W-2s, which are issued in 2013. On Tuesday, the IRS said in Notice 2011-28, that employers that issue fewer than 250 W-2s in 2011 "will not be required to report the cost of health coverage on W-2s prior to January 2014. This transition relief will continue until the issuance of further guidance."
In addition, the IRS made clear that employers will not have to issue W-2s to retirees who receive health care coverage but no longer receive wages or salary. "An employer is not required to issue Form W-2 including the aggregate reportable cost to an individual to whom the employer is not otherwise required to issue a Form W-2," the IRS said.
Using a question-and-answer format, Notice 2011-28 also provides guidance for employers that are subject to this requirement for the 2012 Forms W-2 and those that choose to voluntarily comply with it for either 2011 or 2012. The notice includes information on how to report, what coverage to include and how to determine the cost of the coverage.
DOL Releases Report on Self-Insured Health Plans
The U.S. Department of Labor has transmitted to Congress the first annual report on self-insured employee health benefit plans. The report, which was mandated by the Patient Protection and Affordable Care Act, contains general information on self-insured employee health benefit plans covering private-sector employees that file a Form 5500 (they cover 100 or more participants or hold assets in trust) and financial information on the employers that sponsor them.
This report presents data on such plans for 2008, the latest year for which complete data are available. The report includes information on 12,000 self-insured and 5,000 mixed (self-insurance with insurance) health benefit plans, covering 22 million and 25 million participants respectively. The report does not include self-funded plans that are not required to file a Form 5500.
According to the report, just more than 82 percent of private-sector employers with at least 500 employees self-insure at least one of their health care plans, compared with nearly 26 percent for employers with 100 to 499 employees and 13.5 percent for employers with less than 100 employees. "It is unlikely that a large number of small businesses will opt to self-insure" once the reform law "takes full effect, unless comprehensive stop-loss coverage becomes widely available at prices that compete with fully-insured products," according to the report.
The full report and its appendices are linked below.