Employers Must Prepare to Report Health Coverage on W-2 Forms

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Beginning in 2012, the Patient Protection and Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan on their W-2 forms. This reporting is for informational purposes only and is not included in employees’ taxable wages. The IRS recently issued new guidance describing the types of health plan coverage the mandate applies to and how to calculate the cost.

Unless specifically exempt, all employers, including governmental entities, tax-exempt organizations and churches are subject to this requirement. There is a temporary exemption for small employers who issued fewer than 250 W-2 forms in the previous calendar year. Plan sponsors are also exempt from reporting coverage under multi-employer plans, health reimbursement arrangements, dental, and vision plans that are not integrated with a group health plan, and self-insured plans of employers not subject to COBRA or similar requirements. The employer is not required to generate W-2 forms for participants who receive no reportable compensation, such as retirees, COBRA-qualified beneficiaries, disabled former employees, or surviving spouses.

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