W-2s and Health Insurance Reporting
A provision of the Affordable Care Act enacted on March 23, 2010, requires employers to report the aggregate cost of employer sponsored group health care coverage on the employee’s W-2. This reporting to employees is for their informational use only and does not cause employer provided health care coverage to become taxable. Recently the IRS issued notice 2012-9 with updated guidance.
Who must comply?
2012: Employers issuing 250 or more 2011 W-2s
Notice 2011-28 made this requirement optional for smaller employers until further guidance is released.
What must be reported?
Employers are required to report the total cost of all applicable employer sponsored coverage provided to an employee. The amount includes both the portion paid by the employer and the portion paid by the employee.
An employer is not required to issue a W-2 to an individual for reporting health coverage costs that the employer would not otherwise be required to issue a W-2.
Retroactive elections (made in January that affects the previous year premiums) do not need to be reflected on the W-2. The reportable cost for a calendar year is only based upon the information available to the employer as of December 31st
Where on the W-2:
Box 12, Code DD
Unsure what is reportable on the 2012 W-2s or if the new health care reporting regulations apply to you? Download our IRS FAQ index, listing types of insurance coverage with a synopsis of reporting guidance.