W2 Reporting of Employer Paid Insurance

W2 Reporting of Employer Paid InsuranceReporting the employer paid insurance on employee W-2s is voluntary for all employers for 2011 and small employers for 2012.  However, employers with more than 250 W-2s for tax year 2012 will be required to report the employer paid insurance amounts on all employees’ W-2s, due to the Affordable Care Act.

In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee whether or not it was pre-tax.  In the case of a health FSA, the amount reported should not include the amount of any salary reduction contributions.

The cost of these health care benefits will be reported in Box 12 of the Form W-2, with Code DD.  It is listed for informational purposes only, and is not taxable.

For W-2s filed for the 2011 calendar year, employers are not required to report the value of health benefits provided, although they may do so voluntarily. For years after 2011, employers generally are required to report the value of health benefits provided on the Form W-2. Transition relief is available for certain employers and with respect to certain types of coverage.  Reporting for these employers is not required until future guidance is provided. The transition relief applies to the following:

  1. Employers filing fewer than 250 Forms W-2 for the previous calendar year (for example, employers filing fewer than 250 2011 W-2s) will not be required to report the cost of coverage on the 2012 Forms W-2
  2. Multi-employer plans
  3. Health Reimbursement Arrangements
  4. Dental and vision plans that are not integrated into another group health plan
  5. Self-insured plans of employers not subject to COBRA continuation coverage or similar requirements
  6. Employers furnishing Forms W-2 to employees who terminate before the end of a calendar year and request a Form W-2 before the end of that year

Employers are not required to create a W-2 for the sole purpose of reporting health coverage.  Click Here for more detailed information on this topic.

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

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