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W‐2 Reporting Requirements Outlined In the Health Care Reform Bill
As outlined in the Patient Protection and Affordable Care Act, employers will be responsible for reporting the total cost of “applicable employer‐sponsored coverage” to employees on their W‐2’s. This requirement is informational only and does not imply that these coverages will become taxable.
When does this become effective?
Employers will not be required to report any health benefit coverage cost on employee W‐2’s until January 2013 for the 2012 tax year.
Employers who file less than 250 W‐2 forms in 2011 will not be required to report any health benefit coverage cost on employee W‐2’s until January 2014 for the 2013 tax year or until further guidance is issued.
Reporting is optional for all employers for the 2011 tax year.
Should an employee be terminated mid‐year, and request a copy of his or her W‐2 in writing, the employer is required to supply that employee with their W‐2 within 30 days of receiving the request. This requirement applies only after the employer becomes eligible for reporting as outlined above.
What qualifies as “applicable employer‐sponsored coverage”?
According to the IRS: “applicable employer‐sponsored coverage is coverage under a group health plan that the employer makes available to the employee that is non‐taxable to the employee”
Some listed exclusion of this reporting requirement include:
- Coverage for long‐term care
- Coverage only for accident or disability income
- Dental insurance
- Vision insurance
- Workers’ compensation insurance
- Hospital indemnity
- Disease specific policies, such as cancer policies
- Contributions to any Archer MSA, HSA or FSA
What amount of applicable employer‐sponsored coverage should be reported?
The amounts reported on a W‐2 should include both the amounts the employer paid and the amounts the employee paid, including premium for dependent coverage. In short the total premium should be reported.
This information applies to fully insured plans only. There are some circumstances under which having an FSA could change the amount required to be reported. Every company’s situation is different and we strongly advise consulting your attorney or CPA with questions.
For additional information regarding these reporting requirements please review the IRS Notice 2011‐28 (http://www.irs.gov/irb/2011‐16_IRB/ar08.html)as well as the instruction for the 2011 Form W‐2 (http://www.irs.gov/instructions/iw2w3/index.html)
The information contained in this document is for information purposes only, and may not apply to your situation. The author, publisher, distributor and provider provide no warranty about the content or accuracy of content enclosed. Information provided is subjective. Keep this in mind when reviewing this guide. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages resulting from use of this guide.
If you have any questions or need any additional information, please contact Mark Jackson.
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