When you count the number of
eligible employees,
for Guaranteed issue under AB 1672 Small Group
Health Care Reform,
companies that are affiliated companies (common ownership) and that are eligible to file a
combined income tax return for purposes of
state taxation shall be
considered one employer. CA Insurance Code §10700 w 1
Links
Management Carve Outs -
where you only cover the owners & managers, NOT employees, and is not
guaranteed issue, under AB 1672 but is subject to
Underwriting.
IRS Form 851 that
attaches to a Corporate Income Tax Return to show what companies are
affliated.
Attorney's Explanation See the benefits.com
Aetna's
Form I certify that the applicant is a single employer under section
414 of Internal Revenue Code of 1986 (26 U.S.C.
§
414 (b), 9c), (m),
or (o), and under
any applicable state law.
Blue Shield's rule: If an owner
believes that the structure of his/her holdings produces a single
employer/employee relationship, Blue Shield will require copies of all
associated
Articles of Incorporation, Partnership Agreements, and a letter from the
employer's CPA stating that all business entities are eligible to file a
combined tax return. Blue Shield's determination of whether or not there is
one responsible employer will be final.
blueshieldca.com
Technical Code Links
NOTE - some of this may NOT apply to Health Insurance - BUT to
pensions - check the
codes CAREFULLY or your legal counsel.
Calif. Franchise Tax Board
California Tax Code
Guidelines for
Corporations filing a combined return
IRS 414 (b) Employees of controlled group
of corporations.--For purposes of
sections 401,
408(k),
408(p),
410,
411,
415, and
416, all employees of all corporations which are members of a
controlled group of corporations (within
the meaning of
section 1563(a), determined without regard to
section 1563(a)(4) and
(e)(3)
(C)) shall be treated as employed by a single employer. With respect to
a plan adopted by more than one such corporation, the applicable limitations
provided by
section 404(a) shall be determined as if all such employers were a
single employer, and allocated to each employer in accordance with
regulations prescribed by the Secretary.
414 (c) Employees of partnerships, proprietorships, etc., which are
under common control.--For purposes of
sections 401,
408(k),
408(p),
410,
411,
415, and
416, under regulations prescribed by the Secretary, all employees of
trades or businesses (whether or not incorporated) which are under common
control shall be treated as employed by a single employer. The regulations
prescribed under this subsection shall be based on principles similar to the
principles which apply in the case of subsection (b).
(m) Employees of an affiliated service group.--
(1) In general.--For purposes of the employee benefit requirements
listed in paragraph (4), except to the extent otherwise provided in
regulations, all employees of the members of an affiliated service group
shall be treated as employed by a single employer.
(2) Affiliated service group.--For purposes of this subsection, the
term "affiliated service group" means a group consisting of a service
organization (hereinafter in this paragraph referred to as the "first
organization") and one or more of the following:
(A) any service organization which--
(i) is a shareholder or partner in the first organization, and
(ii) regularly performs services for the first organization or is
regularly associated with the first organization in performing services
for third persons, and
(B) any other organization if--
(i) a significant portion of the business of such organization is
the performance of services (for the first organization, for organizations
described in subparagraph (A), or for both) of a type historically
performed in such service field by employees, and
(ii) 10 percent or more of the interests in such organization is
held by persons who are highly compensated employees (within the meaning
of section 414(q)) of the first organization or an organization described
in subparagraph (A).
(3) Service organizations.--For purposes of this subsection, the
term "service organization" means an organization the principal business
of which is the performance of services.
(4) Employee benefit requirements.--For purposes of this
subsection, the employee benefit requirements listed in this paragraph
are--
(A) paragraphs (3), (4), (7), (16), (17), and (26) of
section 401(a) and
(5) Certain organizations performing management functions.--For
purposes of this subsection, the term "affiliated service group" also
includes a group consisting of--
(A) an organization the principal business of which is performing,
on a regular and continuing basis, management functions for 1 organization
(or for 1 organization and other organizations related to such 1
organization), and
(B) the organization (and related organizations) for which such
functions are so performed by the organization described in subparagraph
(A).
For purposes of this paragraph, the term "related organizations" has the
same meaning as the term "related persons" when used in
section 144(a)(3).
(6) Other definitions.--For purposes of this subsection--
(A) Organization defined.--The term "organization" means a
corporation, partnership, or other organization.
(B) Ownership.--In determining ownership, the principles of
section 318(a) shall apply.
(o) Regulations.--The Secretary shall
prescribe such regulations (which may provide rules in addition to the rules
contained in subsections (m) and (n)) as may be necessary to prevent the
avoidance of any employee benefit requirement listed in subsection (m)(4) or
(n)(3) or any requirement under
section 457 through the use of--
(1) separate organizations,
(2) employee leasing, or
(3) other arrangements.
The regulations prescribed under subsection (n) shall include provisions
to minimize the recordkeeping requirements of subsection (n) in the case of
an employer which has no top-heavy plans (within the meaning of section
416(g)) and which uses the services of persons (other than employees) for an
insignificant percentage of the employer's total workload.
Source -
Westlaw The "Free Source" on
Cornel's Site wasn't working on the day this page was researched. See
also www.irs.gov/
Management
Carve Outs?
26 U.S.C.A. §
1563
I.R.C. §
1563
This might NOT apply to Health Insurance - Maybe
only Pensions - check the codes CAREFULLY or contact your legal counsel.
(a) Controlled
group of corporations.--For purposes of this part, the term
"controlled group of corporations" means any group of--
(1) Parent-subsidiary controlled group.--One or more chains of
corporations connected through stock ownership with a common parent
corporation if--
(A) stock possessing at least 80 percent of the total combined
voting power of all classes of stock entitled to vote or at least 80
percent of the total value of shares of all classes of stock of each of
the corporations, except the common parent corporation, is owned (within
the meaning of subsection (d) (1)) by one or more of the other
corporations; and
(B) the common parent corporation owns (within the meaning of
subsection (d) (1)) stock possessing at least 80 percent of the total
combined voting power of all classes of stock entitled to vote or at least
80 percent of the total value of shares of all classes of stock of at
least one of the other corporations, excluding, in computing such voting
power or value, stock owned directly by such other corporations.
(2) Brother-sister controlled group.--Two or more corporations if 5
or fewer persons who are individuals, estates, or trusts own (within the
meaning of subsection (d)(2)) stock possessing--
(A) at least 80 percent of the total combined voting power of all
classes of stock entitled to vote or at least 80 percent of the total
value of shares of all classes of the stock of each corporation, and
(B) more than 50 percent of the total combined voting power of all
classes of stock entitled to vote or more than 50 percent of the total
value of shares of all classes of stock of each corporation, taking into
account the stock ownership of each such person only to the extent such
stock ownership is identical with respect to each such corporation.
(3) Combined group.--Three or more corporations each of which is a
member of a group of corporations described in paragraph (1) or (2), and
one of which--
(A) is a common parent corporation included in a group of
corporations described in paragraph (1), and also
(B) is included in a group of corporations described in paragraph
(2).
(4) Certain insurance companies.--Two or more insurance companies
subject to taxation under
section 801 which are members of a controlled group of corporations
described in paragraph (1), (2), or (3). Such insurance companies shall be
treated as a controlled group of corporations separate from any other
corporations which are members of the controlled group of corporations
described in paragraph (1), (2), or (3).
(b) Component member.--
(1) General rule.--For purposes of this part, a corporation is a
component member of a controlled group of corporations on a December 31 of
any taxable year (and with respect to the taxable year which includes such
December 31) if such corporation--
(A) is a member of such controlled group of corporations on the
December 31 included in such year and is not treated as an excluded member
under paragraph (2), or
(B) is not a member of such controlled group of corporations on the
December 31 included in such year but is treated as an additional member
under paragraph (3).
(2) Excluded members.--A corporation which is a member of a
controlled group of corporations on December 31 of any taxable year shall
be treated as an excluded member of such group for the taxable year
including such December 31 if such corporation--
(A) is a member of such group for less than one-half the number of
days in such taxable year which precede such December 31,
(B) is exempt from taxation under
section 501(a) (except a corporation which is subject to tax on its
unrelated business taxable income under
section 511) for such taxable year,
(C) is a foreign corporation subject to tax under
section 881 for such taxable year,
(D) is an insurance company subject to taxation under
section 801 (other than an insurance company which is a member of a
controlled group described in subsection (a)(4)), or
(E) is a franchised corporation, as defined in subsection (f)(4).
(3) Additional members.--A corporation which--
(A) was a member of a controlled group of corporations at any time
during a calendar year,
(B) is not a member of such group on December 31 of such calendar
year, and
(C) is not described, with respect to such group, in subparagraph
(B), (C), (D), or (E) of paragraph (2),
shall be treated as an additional member of such group on December 31 for
its taxable year including such December 31 if it was a member of such
group for one-half (or more) of the number of days in such taxable year
which precede such December 31.
(4) Overlapping groups.--If a corporation is a component member of
more than one controlled group of corporations with respect to any taxable
year, such corporation shall be treated as a component member of only one
controlled group. The determination as to the group of which such
corporation is a component member shall be made under regulations
prescribed by the Secretary which are consistent with the purposes of this
part.
Source -
Westlaw
Cornell
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