Academic journal article Journal of Accountancy

W-2 Health Insurance Reporting Detailed

Academic journal article Journal of Accountancy

W-2 Health Insurance Reporting Detailed

Article excerpt

The IRS released guidance (Notice 201128) in question-and-answer format on the new requirement that employers include the "aggregate reportable cost" of employer-sponsored group health insurance on Form W-2, Wage and Tax Statement.

The requirement was added for tax years beginning after 2010 by the Patient Protection and Affordable Care Act (PL 111-148) under IRC [section] 6051(a)(14). It is intended to provide employees with "useful and comparable consumer information" on the cost of their health care coverage, with no resulting effect on its tax treatment. In October 2010, with Notice 2010-69, the IRS made the provision optional for calendar 2011. In other words, employers may report the cost for 2011 but are not required to do so until they issue W-2s in January 2013 for calendar 2012.

Interim guidance in Notice 2011-28 released in late March includes additional transition relief for certain employers and types of health coverage. Notably, employers are not required to report costs for any calendar year if they were required to file fewer than 250 Forms W-2 for the preceding calendar year. For example, employers that issue fewer than 250 Forms W-2 in January 2012 for 2011 will not be required to report costs on any W-2s they issue in January 2013 for 2012 (Q&A 3 of the notice).

Other points covered by the guidance include:

* All employers that provide applicable employer-sponsored coverage under a group health plan are generally subject to the requirement, including federal, state and local governments, churches and other tax-exempt employers. However, reporting is not required by federally recognized Indian tribal governments or for coverage provided by federal or state governments (or their political subdivisions or agencies or instrumentalities) under a plan maintained primarily for members of the military or their families (Q&A's 3 and 22). …

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