Last year the Internal Revenue Service delayed W-2 reporting of the value of health care coverage, making 2011 an optional reporting year. Now in Notice 2011-28, the IRS has given further relief to small employers, granted additional exemptions, and provided guidance on what to report.

Beginning with the 2012 Form W-2, generally issued to employees in 2013, most large employers must report the cost of group health care coverage provided to employees. There are several exceptions to this rule:

• Small employers, who file fewer than 250 Forms W-2 need not comply, at least until 2013 (with respect to W-2s issued in January of 2014), and will have further transitional relief if no further guidance is issued.

• An employer that contributes to a multi-employer plan is not required to report any coverage costs for such plan.

• Indian tribal governments are not required to report.

• A self-insured church plan that is exempt from federal health continuation requirements is also not required to report the amount of such coverage on IRS Form W-2.

• The cost of coverage provided by a governmental entity for the benefit of military members and their families is not subject to reporting.

An employer that does not meet these exceptions should immediately examine its system requirements for reporting, as the penalty for failure to report is $200 per return, to a maximum of $3 million per year.