W2 Reporting Requirements Under Health Care Reform

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W-2 Reporting Requirements Under Health Care Reform

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What’s Changed?

The laws within Health Care Reform present a new reporting requirement for employers.


Tax Rules Stay the Same

• Requirement impacts reporting only

• Provides employee with information about cost of coverage


Compliance Dates

• Reporting delayed until 2013 for small employers (or until further guidance is issued)

• Reporting is mandatory in 2012 for large employers (W-2 forms will be provided in Jan. 2013)


Information to Report

• Total cost of employer-sponsored health coverage• Group health plan coverage• Total cost = employer portion + employee portion• Report in box 12 with code “DD”


Most Employers Must Comply

• Employers that provide applicable health coverage• Includes:

• Government entities• Churches• Religious organizations

• Some exceptions exist


Coverage Exceptions

• Long-term care• HIPAA Excepted benefits• HSA/Archer MSA

contributions

• Health FSA salary reductions

• After-tax coverage• Military benefits


Optional Coverage: What Employers May Report

• Multiemployer plan coverage

• Health Reimbursement Arrangements (HRAs)

• Separate dental and vision plans not in another plan

• Self-insured plans of employers not subject to COBRA

• EAPs, wellness program or on-site medical clinic if no COBRA premiums


Determining Cost of Coverage

• Include employer & employee portion

• Calculation methods:• COBRA applicable

premium method• Premium charged

method• Modified COBRA

premium method


COBRA Applicable Premium Method

• Cost of coverage = COBRA applicable premium• Does not include 2 percent administrative fee


Premium Charged Method

• Can use for insured plans

• Cost of coverage = premium charged by insurer

• Use premium for each employee’s coverage


W-2 Not Required?

• New rule does not create new obligations to issue W-2 form

• Employers do not have to issue a W-2 if it wasn’t otherwise required.


Terminated Employees

• Use reasonable, consistent method to report coverage

• Exception for terminated employees who request W-2s before the end of the year


Compliance Steps

• Assess obligation to report

• Determine the aggregate cost of each type of coverage

• Coordinate with payroll provider to report coverage on Form W-2


Image Credits

Question Mark: http://www.flickr.com/photos/49968232@N00/12364944/

Calendar: http://www.flickr.com/photos/78199439@N00/5144905694/

Siding: http://www.flickr.com/photos/8531344@N06/2369962508/

Taxes: Image courtesy of Arvind Balardman / FreeDigitalPhotos.net

Itemized Deductions: http://zywave.com

Cash and Stethoscope: http://zywave.com

THANK YOU!

CONTACT CBG BENEFITS IF YOU HAVE ANY QUESTIONS.

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W2 Reporting Requirements Under Health Care Reform

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