Health Care Reform: Form W-2 Reporting of Employer-Provided Group Health Coverage

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Executive Summary

Beginning in 2013, large employers will need to report on Forms W-2 the cost of the group health coverage that they provide to their employees. Small employers issuing fewer than 250 Forms W-2 will be exempt, for now. To prepare for this reporting obligation, employers should begin working with their payroll administrators to make sure that their systems are updated by the end of 2011, so that they can track the cost of any coverage provided in 2012 and report it on the Forms W-2 that will be issued in January 2013.

The Internal Revenue Service recently issued Notice 2011-28, which provides guidance on health care reform’s requirement that employers report the cost of group health coverage provided to their employees on Form W-2. As summarized below, this guidance describes when this new requirement will go into effect, what amounts need to be reported, and how those amounts should be calculated. Most importantly, the guidance reiterates that this new reporting requirement does not impact the underlying tax rules: that is, the amounts paid towards health coverage that are otherwise non-taxable remain nontaxable even though reported on the Form W-2.

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Published In: Health Updates, Insurance Updates, Labor & Employment Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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