The Congressional Budget Office is projecting a 400 billion dollar decrease in the federal deficit this year due to an increase in tax revenue. The expiration of the payroll tax cut is the prime reason for the increase.
The IRS has ruled that the mere fact that a health plan provides preventative services with no deductible does not disqualify it for Health Savings Account purposes.
Below is the full text of IRS Notice 2013-57.
Section 223 – Health Savings Accounts
Preventive health services required under Public Health Service Act section 2713 and preventive care for purposes of Health Savings Accounts
This notice clarifies that a health plan will not fail to qualify as a high deductible health plan (HDHP) under section 223(c)(2) of the Internal Revenue Code (Code) merely because it provides without a deductible the preventive health services required under section 2713 of the Public Health Service Act (PHS Act) to be provided by a group health plan or a health insurance issuer offering group or individual health insurance coverage.
Section 223 of the Code permits eligible individuals to establish Health Savings Accounts (HSAs). Among the requirements for an individual to qualify as an eligible individual under section 223(c)(1) (and thus to be eligible to make, or for the individual’s employer to make on their behalf, tax-favored contributions to a HSA) is that the individual be covered under a HDHP and have no disqualifying health coverage. A HDHP is a health plan that satisfies certain requirements with respect to minimum deductibles and maximum out-of-pocket expenses.
Generally, under section 223(c)(2)(A), a HDHP may not provide benefits for any year until the minimum deductible for that year is satisfied. However,
Notice 2004-23 (2004-15 I.R.B. 725), and Q&As 26 and 27 of Notice 2004-50 (2005-33 I.R.B. 196) provide guidance on preventive care benefits allowed to be provided by a HDHP without satisfying the minimum deductible requirement of section 223(c)(2)(A).
Section 1001 of the Affordable Care Act added section 2713 to the PHS Act, requiring group health plans and health insurance issuers offering group and individual health insurance coverage to provide benefits for certain preventive health serviceswithout imposing cost-sharing requirements. (42 U.S.C. 300gg-13). The Affordable Care Act also added section 715(a)(1) to the Employee Retirement Income Security Act of 1974 (ERISA) and section 9815(a)(1) to the Code to incorporate the provisions of part A of title XXVII of the PHS Act, including section 2713, into ERISA and the Code. Guidance under section 2713 of the PHS Act is published jointly by the Treasury Department and IRS and the Departments of Labor and Health and Human Services.
Temporary regulations issued by the Treasury Department and IRS implementing the requirements of section 2713 of the PHS Act under §54.9815-2713T (and parallel regulations issued by the Departments of Labor and HHS) were published in the Federal Register on July 19, 2010 (75 FR 41726), later supplemented by regulations published in the Federal Register on August 3, 2011 (76 FR 46621), February 15, 2012 (77 FR 8725), March 21, 2012 (77 FR 16501) and February 6, 2013 (78 FR 8456). See also Q&A-8 of FAQ Part II (October 8, 2010) and Q&A-1 of FAQ Part V (December 22, 2010), both available at http://www.dol.gov/ebsa/healthreform/.
Under this notice, preventive care for purposes of section 223(c)(2)(C) of the Code is anything that is preventive care under Notice 2004-23 and Notice 2004-50 without regard to whether it would constitute preventive care for purposes of section 2713 of the PHS Act. Preventive care for purposes of section 223(c)(2)(C) also includes services required to be provided as preventive health services by a group health plan or a health insurance issuer offering group or individual health insurance coverage under section 2713 of the PHS Act and regulations and other administrative guidance issued thereunder. Accordingly, a health plan will not fail to qualify as an HDHP under section 223(c)(2) of the Code merely because it provides without a deductible the preventive care health services required under section 2713 of the PHS Act to be provided by a group health plan or a health insurance issuer offering group or individual health insurance coverage.
EFFECT ON OTHER DOCUMENTS
This notice generally provides that any goods or services that constitute preventive care under the guidance in Notice 2004-23 and Notice 2004-50 will continue to be treated as preventive care for purposes of section 223 and clarifies that any preventive services under section 2713 of the PHS Act will also be treated as preventive care under section 223.
The principal author of this notice is Karen Levin of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Governmental Entities), though other Treasury Department and IRS officials participated in its development. For further information on the provisions of this notice, contact Karen Levin at (202) 927-9639 (not a toll-free number.)
Congratulations to Grace Bohall, staff accountant in the Winter Park office of DAPCPA Pope & Associates, who passed the final section of the CPA exam last week. Once she meets the ethics requirements of the Colorado Board of CPAs, she will be a Certified Public Accountant.
The CPA exam is made up of four parts and is widely recognized as one of the most difficult of the professional exams.
In Welle v Treasury (Welle T.C. No. 19 2013), a case that we have been watching for a while due to its possible broad implications, the tax court found for the taxpayer.
In its opinion, the tax court found that the taxpayer, by reimbursing his corporation for the cost of the services, was only using the corporation as a conduit. As such, there was no deemed dividend.
Small employers must notify their employees of their health care options by October 1, 2013 and they need to be able to prove that they did so or they will be subject to penalties under the law.
We have a model form that we will give you for free. Please email me at email@example.com and I will send it to you.
The US Treasury has issued proposed rules designed to ease some of the reporting burden for employers and insurance companies under Obamacare.
Though we are still evaluating the scope of the rules, Thursday's proposal would, among other things, eliminate the need for employers to determine whether particular employees are full-time where adequate coverage is offered to all "potentially full-time employees." It also would let employers report specific costs for health plans only if the cost is above a certain threshold dollar amount.
More to follow.
The Wall Street Journal is reporting this morning that the IRS will begin classifying automatic tips as service charges beginning in January of 2014. Automatic tips are commonly added to the bills of larger parties.
This means that the tips have to be added to the regular wages of the wait staff/employees, are then subject to withholding AND employer matching for Social Security and Medicare purposes.
Give us a call if you have questions.
The Wall Street Journal Is reporting that the key interest rates for jumbo mortgages have dropped to below those of smaller new loans.
IRS Regulation126519-11has become permanent and addresses the amount of taxes paid for purposes of the foreign tax credit. As always, give us a call if you have any questions.
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