State of Kansas.
FROM: Kathleen Sebelius, Commissioner of Insurance
DATE: March 17, 2000
The purpose of this bulletin is to advise all companies authorized to transact Accident and Health Insurance in the State of Kansas of the passage of House Bill 2090 this past legislative session. House Bill 2090 amends K.S.A. 40-2239, 40-2240,40-2242, 40-2246 and K.S.A. 1998 Supp. 40-2241. The bill also repeals the existing sections in addition to repealing K.S.A. 40-2244 and 40-2245. The new law took effect on July 1, 1999. Small businesses obtaining a certificate to the refundable credits may begin claiming the refundable tax credits January 1, 2000.
This law allows qualifying small businesses to take
advantage of refundable tax credits for providing health insurance to eligible
employees. The refundable credits last
for five years. For the first two
years, the refundable credit is worth $35 per covered eligible employees or 50%
of the total premiums paid by the business on behalf of its covered eligible
employees, whichever is less. In the
third year, the refundable tax credit is equal to 75% of $35 per
covered eligible employee per month or 75% of 50% of the total premiums
paid by the business on behalf of its covered eligible employees.
To qualify for the refundable tax credits, the
small business must have between two (2) and fifty (50) employees that are
employed for an average of thirty (30) hours per week. The small business must have also not have
contributed to a health insurance premium on behalf of an employee in the last
two years. The two year period runs
backward from the date of application to the Kansas Insurance Department to
utilize the refundable tax credits. The
refundable tax credit may not be claimed for family members of employees that
are covered under the employer’s health insurance plan.
A small business that wants to take advantage of the
refundable credits must first make application to the Kansas Insurance
Department. An application can be
obtained by contacting Craig VanAalst at (785) 296-3765. Upon receipt of an application, the
Commissioner will either approve or disapprove the application within 10
days. If an application is approved,
the Commissioner will issue a Certificate to the applicant. The applicant may begin making premium
payments for eligible employees on the date that the Commissioner issues the
Certificate (unless the Certificate is issued prior to January 1, 2000).
In order to maximize use of the refundable tax credits small businesses should begin making premium payments for eligible employees at the beginning of their tax year.
When the small business files its tax return, the return must be
accompanied by Kansas Department of Revenue Form K-57 and a Verification form
obtained through the Kansas Insurance Department. The Verification form must be signed by the insurance agent with
which the small business has obtained its health insurance. The agent must verify the number of months
coverage was provided by the employer to the employees and the number of
employees covered. Coverage must be
provided for over one-half the days in a month for the employer to be able to
utilize the refundable tax credits.
The refundable tax credits may not be claimed for a month where
coverage was not provided to the employee for less than half the days in a
month.
The tax credit is used to offset corporate income tax due
if the small business is a “C” corporation.
If the “C” corporation does not owe any income tax, the refundable tax
credit will be refunded to the corporation.
If the small business is an “S” corporation or a partnership,
shareholders or partners may utilize the credits against income tax due on
their personal income tax returns in proportion to their ownership share. If
the credit exceeds the taxes imposed for the taxable year, that portion of the
credit, which exceeds those taxes, will be refunded.
If you have any questions or comments regarding the
information contained herein, please direct them to Craig VanAalst
(785-296-3765) or Rebecca Sanders (785-296-6664), at the Kansas Insurance
Department, 420 S.W. Ninth Street, Topeka, Kansas, 66612.
____________________________________
Kathleen
Sebelius
Commissioner
of Insurance