IRS Issues Guidance on New W-2 Reporting Rules

Next year, employers will be required to report the cost of group health insurance on employees’ W-2 forms, the purpose of which, is to inform employees of the cost of their health insurance. To help employers meet this requirement the IRS issued Notice 2012-9 which offers further explanation of what should be included. Below are answers to a few common questions, for the full report click here.

Q. Who is required to report?
A. All employers (including churches/religious organizations, governmental entities, and those employers not subject to COBRA continuation coverage requirements). Employers who filed fewer than 250 W-2s in 2011, federally recognized Indian tribal governments, and corporations owned by Indian tribal governments are exempt.

Q. Are there any types of coverage that should not be included in the cost reported?
A. Yes, there are several. Things like long-term care insurance, an employee or their spouse’s contributions to their HSA, and limited scope dental or vision care provided under a separate policy do not need to be included in the cost reported. Be sure to familiarize yourself with all of the exceptions.

Q. How is the cost reported on Form W-2?
A. The cost will be reported in box 12, using code DD.

If you would like more information, or if you have questions regarding this matter, please contact your H&S tax professional.