Smart Benefits: New IRS Notice Issued on Cadillac Tax
Monday, September 07, 2015
In February, the IRS issued a notice that addressed the definition of applicable coverage, the determination of the cost of applicable coverage, and the application of the dollar limit to determine any excess benefit subject to the excise tax. This new notice supplements the first one by discussing a number of additional issues, including identification of taxpayers who may be liable for the tax.
Under the Internal Revenue Code, each coverage provider must pay the tax on its applicable share of the excess benefit with respect to an employee. The coverage provider is (A) the health insurance issuer for applicable coverage under a group health plan, (B) the employer, for applicable coverage under an HSA or Archer medical savings account, and (C) the person that administers the plan benefits for any other applicable coverage. But the “person that administers the plan benefits” is not defined. Under one approach discussed in the notice, it would be the person responsible for performing the day-to-day functions that constitute administration of plan benefits while under a second approach, it would be the person with ultimate authority or responsibility under the plan or arrangement with respect to the administration of the plan benefits, regardless of whether that person routinely exercises that authority or responsibility.
The notice also contained the Treasury and IRS’ considerations regarding a number of other aspects of the future regulations:
• whether some or all of the income tax reimbursement could be excluded from the cost of applicable coverage, and how to apply the described tax reimbursement formula if it can be excluded
• different ways the regulations may allocate contributions to HSAs, Archer MSAs, FSAs, and HRAs
• how and in what form employers would report the calculation of the amount of the excess benefit subject to the tax
The IRS is seeking public comment on all of the issues addressed in the notice, which will be the final step before drafting and releasing the proposed regulations. Comments are due by October 1, 2015.
Related Slideshow: Massachusetts Business Rankings
See how Massachusetts stacked up.
Related Articles
- Smart Benefits: Are You Audit-Ready?
- Smart Benefits: New FMLA Spouse Definition Now In Effect
- Smart Benefits: New SBC Template Delayed ‘Til 2016
- Smart Benefits: EEOC Notice Clarifies ADA-Compliant Wellness Programs
- Smart Benefits: New Study Shows Exchange Satisfaction Higher
- Smart Benefits: HHS to Up Investigations of Exchanges
- Smart Benefits: Fines for Small Business Premium Reimbursement Delayed
- Smart Benefits: New Forms for Filing this Tax Season
- Smart Benefits: Voluntary Benefits Up with Employers and Employees
- Smart Benefits: FLSA Exempt Status Change for Home Care Workers Halted
- Smart Benefits: 8 Reasons to Have an Employee Handbook
- Smart Benefits: Self-Funded Insurance - A Growing Option Among Employers
- Smart Benefits: Public Comment Period for Cadillac Tax Closed
- Smart Benefits: Draft 2015 Forms Released for ACA Reporting
- Smart Benefits: SHRM Study Shows More Benefits Offered to Employees
- Smart Benefits: IRS Releases ACA Taxpayer Data for 2014
- Smart Benefits: Delaware Says No to State Exchange
- Smart Benefits: Is Your Package Competitive? What’s New in Employee Benefits
- Smart Benefits: Fines Now In Effect for Small Business Health Plan Reimbursements
- Smart Benefits: Feedback on Next Essential Health Benefits Benchmark Plan Due June 30
- Smart Benefits: Preventive Services Requirement Clarified
- Smart Benefits: Healthy Self” Campaign Highlights Preventive Services
- Smart Benefits: PCORI Fees Due July 31 for Some Employers
- Smart Benefits: File 2014 Taxes—or Risk Losing Subsidy
- Smart Benefits: “Embedded” Out-of-Pocket Limits Required for Group Plans in 2016
Follow us on Pinterest Google + Facebook Twitter See It Read It