Employer Health Insurance Contribution Credit

The 2005 Kansas Legislature approved a plan to enhance the tax credits given to small employers that begin offering health benefit plans. This plan provides an income tax credit for employers that have established a small employer health benefit plan or made contributions to a health savings account of a covered eligible employee after Dec. 31, 2004.

For those employers that established a small employer health benefit plan after Dec. 31, 1999 but prior to Jan. 1, 2005, an income tax credit is available for an employer for amounts paid during the taxable year on behalf of an eligible employee to provide health insurance or care.

The following employer health insurance contribution credit information will be split between the two different time periods

INCOME TAXPAYER-Effective for all taxable years beginning after Dec. 31, 2004 for those employers that have established a small employer health benefit plan or made contributions to a health savings account.

Beginning in tax year 2013, this credit shall only be available to corporations that are subject to the Kansas corporate income tax, i.e. C corporations. This credit shall not be available to individuals, partnerships, S corporations, limited liability companies, and other pass-through entities.

Qualifications

As a condition to participation as a member of any small employer health benefit plan, an employer shall have not contributed within the preceding two years to any health insurance premium or health savings account on behalf of an employee who is to be covered by the employer’s contribution other than a contribution by an employer to a health insurance premium or health savings account within the preceding two years solely for the benefit of the employer or the employer’s dependents.

Credit Amount

The credit is $70 per month per eligible covered employee for the first 12 months of participation, $50 per month per eligible covered employee for the next 12 months of participation and $35 per month per eligible covered employee for the next 12 months of participation.

Employer Health Insurance Contribution Refund

If the credit allowed exceeds the tax liability for the taxable year, that portion of the credit which exceeds those taxes shall be refunded to the taxpayer.

Procedures to Claim the Credit

You may download Schedule K-57 to claim the employer health insurance contribution credit. This schedule must be completed and submitted with the income tax return. You may also call the Department of Revenue voice mail system at 785-296-4937 to request Schedule K-57. You will be asked to give your name, address, phone number and form(s) you desire. Please allow two weeks for delivery of your forms.

INCOME TAXPAYER-Effective for all taxable years beginning after Dec. 31, 1999 and prior to January 1, 2005 for those employers that have established a small employer health benefit plan.

Qualifications

Qualified employers desiring to organize and maintain a health benefit plan must receive approval from the commissioner of insurance. The commissioner shall issue a certificate to a qualified employer participating in any such small employer health benefit plan entitling the employer to claim the tax credit. For information regarding the approval process, contact the:

Kansas Insurance Department
420 SW 9th St
Topeka, KS 66612-1678
Fax: 785-296-7850
Phone: 785-296-3071

As a condition to participation as a member of any small employer health benefit plan, an employer shall have not contributed within the preceding two years to any health insurance premium on behalf of an employee who is to be covered by the employer’s contribution other than a contribution by an employer to a health insurance premium within the preceding two years solely for the benefit of the employer or the employer’s dependents.

Credit Amount

An income tax credit is allowed to an employer for amounts paid during the taxable year on behalf of an eligible employee to provide health insurance or care.

The credit is $35 per month per eligible employee or 50 percent of the total amount paid by the employer during the taxable year, whichever is less, for the first two years of participation.

In the third year, the credit is equal to 75 percent of the lesser of $35 per month per employee or 50 percent of the total amount paid by the employer during the taxable year.

In the fourth year, the credit is equal to 50 percent of the lesser of $35 per month per employee or 50 percent of the total amount paid by the employer during the taxable year.

In the fifth year, the credit is equal to 25 percent of the lesser of $35 per month per employee or 50 percent of the total amount paid by the employer during the taxable year.

For the sixth and subsequent years, no credit shall be allowed.

Employer Health Insurance Contribution Refund

If the credit allowed exceeds the tax liability for the taxable year, that portion of the credit which exceeds those taxes shall be refunded to the taxpayer.

Procedures to Claim the Credit

You may download Schedule K-57 to claim the employer health insurance contribution credit. This schedule must be completed and submitted with the income tax return. You may also call the Department of Revenue voice mail system at 785-296-4937 to request Schedule K-57. You will be asked to give your name, address, phone number and form(s) you desire. Please allow two weeks for delivery of your forms.

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Eligible Employee

Eligible employee means an employee who is employed by the employer for an average of at least 30 hours per week and who elects to participate in one of the benefit plans, and includes individuals, who are sole proprietors, business partners and limited partners. Eligible employees do not include individuals who are engaged as independent contractors; whose periods of employment are on an intermittent or irregular basis; or who have been employed by the employer for fewer than 90 days.

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Health Benefit Plan

Health benefit plan means a contract for group medical, surgical, hospital or any other remedial care recognized by state law and related services and supplies.

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Small Employer Health Benefit Plan

Small employer health benefit plan means an arrangement providing a health benefit plan for the purpose of covering an employers eligible employees and the employees family members. Family member means an eligible employee’s spouse and any unmarried dependent child or stepchild.

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Health Savings Account

A trust created or organized in the United States as a health savings account exclusively for the purpose of paying the qualified medical expenses of the account beneficiary, but only if the written governing instrument creating the trust meets the requirements specified by the medicare, prescription drug, improvement and modernization act of 2003, Pub. L. No. 108-173, 117 Stat. 2067.

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