NRS363A.135. Payroll tax: Deduction of certain amounts paid for health insurance or health benefit plan for employees.

      1.  Except as otherwise provided in subsection 2, an employer may deduct from the total amount of wages reported and upon which the excise tax is imposed pursuant to NRS 363A.130 any amount authorized pursuant to this section that is paid by the employer for health insurance or a health benefit plan for its employees in the calendar quarter for which the tax is paid. The amounts for which the deduction is allowed include:

      (a) For a self-insured employer, all amounts paid during the calendar quarter for claims, direct administrative services costs, including such services provided by the employer, and any premiums paid for individual or aggregate stop-loss insurance coverage. An employer is not authorized to deduct the costs of a program of self-insurance unless the program is a qualified employee welfare benefit plan pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq.

      (b) The premiums for a policy of health insurance or reinsurance for a health benefit plan for employees.

      (c) Any amounts which are:

             (1) Paid by an employer to a Taft-Hartley trust which:

                   (I) Is formed pursuant to 29 U.S.C. § 186(c)(5); and

                   (II) Qualifies as an employee welfare benefit plan; and

             (2) Considered by the Internal Revenue Service to be fully tax deductible pursuant to the provisions of the Internal Revenue Code.

      (d) Such other similar payments for health care or insurance for health care for employees as are authorized by the Department.

      2.  An employer may not deduct from the wages upon which the excise tax is imposed pursuant to NRS 363A.130:

      (a) Amounts paid for health care or premiums paid for insurance for an industrial injury or occupational disease for which coverage is required pursuant to chapters 616A to 616D, inclusive, or 617 of NRS; or

      (b) Any payments made by employees for health care or health insurance or amounts deducted from the wages of employees for such health care or insurance.

      3.  If the amount of the deduction allowed pursuant to this section to an employer for a calendar quarter exceeds the amount of reported wages for that calendar quarter, the excess amount of that deduction may be carried forward to the following calendar quarter until the deduction is exhausted. An employer claiming the deduction allowed pursuant to this section shall, upon the request of the Department, explain the amount claimed to the satisfaction of the Department and provide the Department with such documentation as the Department deems appropriate for that purpose.

      4.  As used in this section:

      (a) “Claims” means claims for those categories of health care expenses that are generally deductible by employees on their individual federal income tax returns pursuant to the provisions of 26 U.S.C. § 213 and any federal regulations relating thereto, if those expenses had been borne directly by those employees.

      (b) “Direct administrative services costs” means, if borne directly by a self-insured employer and reasonably allocated to the direct administration of claims:

             (1) Payments for medical or office supplies that will be consumed in the course of the provision of medical care or the direct administration of claims;

             (2) Payments to third-party administrators or independent contractors for the provision of medical care or the direct administration of claims;

             (3) Rent and utility payments for the maintenance of medical or office space used for the provision of medical care or the direct administration of claims;

             (4) Payments for the maintenance, repair and upkeep of medical or office space used for the provision of medical care or the direct administration of claims;

             (5) Salaries and wages paid to medical, clerical and administrative staff and other personnel employed to provide medical care or directly to administer claims; and

             (6) The depreciation of property other than medical or office supplies, used for the provision of medical care or the direct administration of claims.

      (c) “Employee welfare benefit plan” has the meaning ascribed to it in 29 U.S.C. § 1002.

      (d) “Employees” means employees whose wages are included within the measure of the excise tax imposed upon an employer by NRS 363A.130, and their spouses, children and other dependents who qualify for coverage under the terms of the health insurance or health benefit plan provided by that employer.

      (e) “Health benefit plan” means a health benefit plan that covers only those categories of health care expenses that are generally deductible by employees on their individual federal income tax returns pursuant to the provisions of 26 U.S.C. § 213 and any federal regulations relating thereto, if those expenses had been borne directly by those employees.

      (f) “Self-insured employer” means an employer that provides a program of self-insurance for its employees.

      (Added to NRS by 2005, 22nd Special Session, 132)