by Tracy McLaughlin, CFE, Consulting Manager
In a recent article, the Internal Revenue Service (IRS) provided new guidance on the information that employers are required to provide to employees relating to the health care costs that employers provide through group health care.
When will I be required to report this information on our W-2’s?
The Patient Protection and Affordable Care Act, P.L. 111-148, requires employers to report the “aggregate reportable cost” of “applicable employer-sponsored coverage” under an employer-sponsored group health plan on Form W-2, Wage and Tax Statement. To give employers more time to update their payroll systems, the IRS made this requirement optional for all employers for 2011 Forms W-2 due in 2012 (Notice 2010-69). Moreover, the IRS has provided further relief for small employers filing fewer than 250 Forms W-2 by making the reporting requirement optional for them for 2012 Forms W-2 (Notice 2011-28).
So, if you issue 250 W-2’s or more, currently you will be required to include the additional health care cost information on the 2012 forms furnished in January 2013. However, if you issue less than 250 forms, you will be required to include the additional information on the 2013 forms.
What information needs to be included as part of the health care cost reporting?
The aggregate reportable cost generally includes the portion of the cost paid by the employer and the portion paid by the employee. Both portions should be included, regardless of whether the employee paid through pretax or after-tax contributions. However, contribution amounts made to Archer MSAs and HSAs are excluded.
Salary reduction contributions to a health FSA are also generally excluded. However, to the extent the amount of a health FSA exceeds the employee’s salary reduction contributions for the year, it is included in the aggregate reportable cost.
For the most current information:
While the information presented here discusses Notice 2011-28, be sure to review newer notices issued by the IRS online at www.irs.gov.
