OSPS E-News ~ Update - Imputed Value of Health Insurance Coverage

[Announcements from OSPS to the users of the Oregon State Payroll Application]

Earlier this week, we communicated about the imputed value of health
insurance coverage for children over age 19.  That message is pasted in
below.  We have now received updated instructions from the Department of
Revenue about how to report these amounts on Form W-2.  We will post the
imputed value amount in Box 14 with a label "ACA Child".  At the time
W-2s are issued, we will provide you with an informational message to
give to affected employees.   PEBB is sending a report to each affected
agency with a listing of all employees for whom an imputed value will be
reported.  This topic is on the agenda for this afternoon's OSPS Payroll
Forum.  

 

Message From DOR - Dated 12/16/2010

Affordable Care Act:

As a result of changes made by the recently enacted Affordable Care Act,
health coverage provided for an employee's child under 27 years of age
is now generally tax-free to the employee for federal purposes,
effective March 30, 2010.  Previous law allowed such treatment for
dependents under 19 years of age, or under 24 if the dependent was a
student,.

 

Oregon has not adopted these changes.  As a result, any expanded
coverage provided for adult children under the Affordable Care Act is
taxable income to the employee receiving the benefit for Oregon
purposes.  The legislature may act to adopt this exclusion in the 2011
session, but at this time it cannot be predicted with any certainty that
such action will occur.  

 

The department recommends that employers take the necessary steps to
include these amounts on the affected employee's W-2 statement for tax
year 2010.  Please report this amount in Box 14 and label this amount
"ACA Child." Do not modify the state wages in Box 16. This will allow
taxpayers to easily identify the appropriate amount of income to report
if the legislature does eventually decide to exclude these amounts from
Oregon taxable income.  We will post further updates and instructions to
taxpayers on our website in January.

 

 

Message Sent by OSPS 12/15/2010

PEBB sent e-mail communication last night to employees who have a child
aged 19 or over enrolled in PEBB benefits.  See attached.
 
PEBB states, "Your payroll will add the value of this coverage...".
 
OSPS will add the amounts given to us by PEBB to the affected employee's
Oregon taxable income.  This will be on the employee's W-2.  Agency
payroll does not need to do anything for this to happen.  At the moment
we do not have a finalized listing from PEBB sorted by agency.  A list
will be provided to agency payroll whether that comes to you through the
PEBB.Benefits system or from OSPS.  
 
Please be aware that the Department of Revenue has a "reconnect bill"
for Legislative action during the 2011 session that, if passed, would
eliminate the taxability of the insurance coverage retroactive to 2010
and going forward.  Should the Legislature reconnect the Oregon tax law
to the federal law, OSPS will issue corrected W-2s to reduce the Oregon
taxable income previously reported.  
 
Affected employees may wish to delay filing their 2010 Oregon income tax
return until this has been resolved.  We will prepare communication
about this to be distributed to affected employees with their 2010 W-2.
 
 
This topic is on the agenda for the OSPS Payroll Forum scheduled for
Friday 12/17/2010.  OSPS will provide an update on this project and
answer questions to the degree that we can.  
 
As always, we recommend that employees consult with their tax
professional for answers to their individual tax questions.
 
 

 

 

Sharon McKeehan, Manager

Oregon Statewide Payroll Services

DAS/State Controller's Division

155 Cottage Street NE,  U-50

Salem, OR  97301-3969

(503) 378-6777 ext. 230

Visit our Online Resource Center: http://www.oregon.gov/DAS/SCD/OSPS/

 

 

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