The good news: IRS has delayed one of the thornier provisions of federal health reform that would affect all employers: changes to W-2 reporting requirements.

The bad news: Employers may well have to change the way they offer and pay for health insurance to their officers, executives, and owners – including through provisions in their employment or severance agreements, rather than through their health plans - in the next few months.

W-2 Reporting Change Delay

The federal health care reform law contains a provision that requires employers to include the cost of the employer-paid portion of health insurance on their employees’ 2011 W-2s. The change in reporting does not change how employer-provided health benefits are taxed, but instead is intended to show employees the value of health insurance as an employee benefit. While this is a worthwhile goal, changing W-2 reporting is an administratively difficult and potentially costly change to payroll processing.

Recently, the IRS announced that it will waive the new W-2 reporting requirement for one year. Now, health care cost information will have to be reported beginning with the 2012 W-2s, which are issued in 2013.

Expanded Nondiscrimination Rules

Many employers offer/pay for different benefits to different groups of employees.