BUSINESS BRIEFS (06/01/2010)

Average State-wide Premiums for Small Group Markets for Determining Small Employer Health Insurance Credit Released
Understanding Manufacturers’ Recalls and Technical Service Bulletins




Average State-wide Premiums for Small Group Markets for Determining Small Employer Health Insurance Credit Released
Joe Rossmann, Insurance Trust CEO, ABC Merit Choice

The IRS has released the average premium for the small group market in each state for the 2010 tax year for purposes of computing the Code Sec. 45R tax credit for eligible small employers that make nonelective contributions toward their employee’s health insurance premiums. The premiums must be made under an arrangement that requires the employer to pay at least 50 percent of each participating employee’s premiums for coverage provided by a qualified health plan.

Code Sec. 45R was added to the Internal Revenue Code by section 1421 of the Patient Protections and Affordable Care Act (P.L. 111-148, enacted March 23, 2010). The credit for 2010 is equal to 35 percent (25 percent in the case of a tax-exempt organization) of the lesser of: (1) the amount of nonelective contributions paid by the eligible small employer on behalf of employees under the arrangement during the tax year; and (2) the amount of nonelective contributions the employer would have paid under the arrangement if each such employee were enrolled in a plan that had a premium equal to the average premium for the small group market in the state (or in an area in the state) in which the employer is offering health insurance coverage.

Additional average premium rates for the small group market in certain areas within certain states may be issued at a future date. In no event will such rates be lower than the premium rates for a state as a whole.

• Alaska — $6,204 (employee-only); $13,723 (family coverage);
• Oregon — $4,681; $10,890;
• Washington — $ 4,543; $10,725;

SOURCE: Rev. Rul. 2010-13, I.R.B. 2010-21, May 24, 2010.

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Understanding Manufacturers’ Recalls and Technical Service Bulletins
By Aaron Lindstrom, Enterprise Fleet Management

With recent news headlines about vehicle safety recalls, it is important to understand the differences in terminology for recalls versus technical service bulletins (TSB), both of which are issued to detail a fix for a known concern and may include certain limitations. While both warrant attention, there are distinct differences.

Recalls are Mandatory

A motor vehicle recall is a process that involves recalling vehicles that are found to have a manufacturing problem that can cause an emissions or safety issue. These can range from a minor mechanical defect like a malfunctioning ignition system or vehicle sensor, to problems with the suspension or brake systems, as well as major engine or driveline failures.

The recall system for motor vehicles in the United States, enacted in 1966 by the Department of Transportation’s National Highway Traffic Safety Administration (NHTSA), allows the NHTSA to issue vehicle safety standards and to require manufacturers to recall vehicles that do not meet these standards or have safety-related defects.

After an issue is determined the NHTSA gives manufacturers the opportunity to announce recalls voluntarily. If this does not happen, the NHTSA has the authority to announce a mandatory recall. When a recall is issued, voluntary or mandatory, the manufacturer must correct the defect to meet Federal safety standards at no cost to the customer.

Sometimes a motor vehicle recall is for a simple and minor situation, while others can represent serious safety hazards. Safety-related defects may exist in a group of vehicles with the same design or manufacturer, or items of equipment with the same type and manufacturer. Because many of today’s vehicle models share certain parts, the effect of one component on the safety or emissions of many vehicle models is more common than ever.

TSBs are Voluntary

Because not every chronic vehicle problem is a safety or emissions issue or results in a recall, the manufacturers have developed TSBs. Since the TSB is not a recall, the manufacturer has no obligation to notify customers or make the repair at no cost.

It is important note that warranty coverage limits policies are not altered by a TSB. Warranty coverage limited are determined by the applicable warranty.

Thousands of bulletins are issued each year by car manufacturers with up-to-date factory fixes for difficult to diagnose problems such as rough idles, intermittent stalls, hard starts, and all varieties of shakes, rattles and clunks. Information usually includes recommended service procedures to improve a vehicle’s performance, reduce future breakdowns or provide details for a factory authorized modification.

More often than not, only a portion of the production run of a certain make, model, and year vehicle is affected by a motor vehicle recall or TSB. To verify whether a vehicle is involved have a dealer’s service department run the vehicle VIN through the manufacturers data base.

Information issued in a TSB always is intended for use by trained, professional technicians with the knowledge, tools and equipment to do the job properly and safely. Because professional technicians are trained to understand conditions that may be particular to some vehicles, procedures should never be attempted by do-it-yourselfers.

Owners Have Time Limitations

Under certain conditions manufacturers are required to provide reimbursement for certain costs incurred by owners to remedy a safety defect prior to a recall, but there are specific closing dates for eligibility and documentation of costs is required for reimbursement. In addition, there may be limitations based on the age of the vehicle. In order to be eligible for a no cost remedy, the vehicle cannot be more than 10 years old on the date the defect or noncompliance is determined. However, since the safety risk still exists, owners are encouraged to remedy the safety problem at their own expense.

For questions concerning TSBs or motor vehicle recalls, contact your local dealer for assistance.

Aaron Lindstrom, Senior Account Executive for Enterprise Fleet Management in Washington, can be reached at (206) 423-3958. Visit the company’s web site at www.enterprisefleet.com or call toll free 1-877-23-FLEET.

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