The Affordable Care Act requires employers to report the total cost (both employer and employee contributions) for an employee’s health insurance plan on W-2 forms. Employers were supposed to begin reporting this information in calendar tax year 2011. However, the IRS delayed the start of this requirement (IRS Notice 2010-69) making reporting the cost of coverage on W-2 forms for 2011 optional for all employers.
The IRS has issued additional interim guidance (IRS Notice 2011-28) this week further delaying this requirement for smaller employers. Specifically, the reporting of health insurance costs on W-2 forms is optional for smaller employers filing fewer than 250 W-2 forms for at least both 2011 and 2012, and until further guidance is issued. Larger employers are required to start reporting this information on 2012 Forms (i.e., 2012 W-2 forms distributed to employees in January 2013).
For large employers required to report health insurance costs on 2012 W-2 forms and employers opting to report these costs voluntarily, this IRS notice also includes interim guidance on how to how to calculate health insurance costs, the types of coverage for which costs must be reported, and which employers are subject to this requirement.
The IRS is requesting comments on this interim guidance and emphasized that the reporting of health insurance costs on W-2 forms is to inform workers of the cost of their coverage. It does not cause excludable employer-sponsored health care coverage to be taxable. For more information, visit the IRS website: http://www.irs.gov/newsroom/article/0,,id=237870,00.html