The new Massachusetts Health Care Reform Bill was signed into law on April 12, 2006. The goals of this act are to expand health coverage to include currently uninsured low-income populations, increase choice, stimulate competition, and try to reduce the burden on taxpayers.

What does this mean to the small business employer? Several mandates effective July 1, 2007, have been established for employers with 11 or more employees as follows:
 

• Employers must have in place a written Section 125 plan. This section of the federal tax code allows employees to pay for certain fringe benefits, such as health care insurance with pre-tax dollars.

• Fair Share Contribution – Employers will be responsible for paying a “fair share contribution” of up to $295 per employee if they are not making a fair and reasonable premium contribution to a group health plan.

What is a “fair and reasonable” contribution? Two tests have been established to answer this question. The primary test states that employers must have 25% of their full time employees (work at least 35 hours) accepted and enrolled into their group health plan. If you fail the primary test, then the secondary test states that employers must pay at least 33 percent of the premiums of the cost of any group health insurance plan offered to their full time employees.

• Free Rider Surcharge – This surcharge must be paid by non-providing employers who have an employee or a dependent who receives free care more than three times in a hospital fiscal year or whose employees or dependents, as a whole, access free care five times or more in a year. The amount of the surcharge would be equal to between 10% and 100% of the state’s cost of the care with the first $50,000 per year being excluded. This amount will be determined based on the number of employees and the number of occurrences.

• Health Insurance Responsibility Disclosure Form – All employers will be required to file this form after close of the September 30th fiscal year. You will be required to provide the number of full time and part time employees, whether you offer subsidized insurance to employees, and whether you offer a Section 125 plan.

• Non-discrimination – If employers provide group health care coverage to full time employees, they must include all full time employees who live in Massachusetts and must pay the same premium contribution percentage for all employees. Exceptions to this include employees covered under retiree health insurance, collective bargaining agreements, and certain practices such as length of service arrangements.

To assist the small businesses within the Bay State, Massachusetts has established the Commonwealth Health Insurance Connector Authority who is expected, within the next few months, to circulate regulations among the business community. Their services will be available to all small businesses with fewer than 50 employees. One of the main purposes of the Connector is to link small businesses with affordable, quality health insurance products.

While the state is continuing to work out all the details, employers are encouraged to look at how this will impact them so they can be assured that they will be in compliance as this July 1st deadline approaches.

For more information on the Massachusetts Health Care Reform please visit the Commonwealth Health Insurance Connector Authority’s website at
http://www.mass.gov/?pageID=hichomepage&L=1&L0=Home&sid=Qhic
or contact Susan Mulford, HR Director at KAF, she can be contacted at 781-356-2000 or smulford@kafgroup.com.

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Taxpayers nationwide have until Tuesday, April 17, 2007, to file their 2006 returns and pay any taxes due, the IRS announced.

Why the extra time? Because April 15 falls on a Sunday in 2007, and the following day, Monday, April 16, is Emancipation Day, a legal holiday in the District of Columbia. In past years, the later deadline applied just to individuals in the District of Columbia and six eastern states who are served by an IRS processing facility in Massachusetts, where Patriots Day will be observed on April 16. But now, the IRS has given the extra time to taxpayers across the country.

The April 17, 2007 deadline applies to the following:

• 2006 federal individual income tax returns, filed electronically or mailed on paper.

• Requests for an automatic six-month tax-filing extension, submitted electronically or on Form 4868.

• Tax year 2006 balance due payments, made electronically (direct debit or credit card) or by check.

• Contributions to a Roth or traditional IRA for the 2006 tax year.

• Individual estimated tax payments for the first quarter of 2007, made electronically or by check.

• Individual refund claims for tax year 2003, where the regular three-year statute of limitations is expiring.

Even with the extra time to file you should avoid the last minute rush by filing early. Contact you KAF representative ASAP for an appointment at 781-356-2000.

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Rev. Proc. 2007-11 provides that the maximum value of employer-provided vehicles first made available to employees for personal use in calendar year 2007 for which the vehicle cents-per-mile valuation rule provided under Reg. 1.61-21(e) may be applicable is $15,100 for a passenger automobile and $16,100 for a truck or van. It also provides the maximum value of employer-provided vehicles first made available to employees for personal use in calendar year 2007 for which the fleet-average valuation rule provided under Reg. 1.61-21(d) may be applicable is $20,100 for a passenger automobile and $21,200 for a truck or van.

Source: Practical Accounting, March 2007, Tax Briefing
 

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March 2007
	Short Term	Mid Term	Long Term
Annual	5.06%	4.86%	5.01%
Semi annual	5.00%	4.80%	4.95%
Quarterly	4.97%	4.77%	4.92%
Monthly	4.95%	4.75%	4.90%
Adjusted AFR for Original Issue Discount (Code Sec. 1288(b))	3.58%	3.71%	4.18%
Code Sec. 382 Adjusted Federal Long Term Rate			4.18%
Long Term Tax exempt rate			4.18%
Low income Housing Credit (Code Sec. 42(b)(2))
70% present value			8.15%
30% present value			3.49%
Valuation Tables (Code Sec. 7520)			5.80%
Deemed Rate of Return for Transfers to Pooled Income Funds (Code Sec. 642(c)(5))			4.80%

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