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November 1, 2012

HRB 56 - Reminder: Fast Approaching Form W-2 Reporting Requirement

Released November 1, 2012 I Download as a PDF

November 1, 2012 --  With 2012 quickly coming to an end, the Affordable Care Act’s (ACA) requirement to report the aggregate cost of health coverage on the Form W-2 is upon us.  As background, ACA requires that the aggregate cost of health coverage be reported on the Form W-2.  The first reporting requirement applies to the 2012 year, due by January 31, 2013. 

For purposes of this reporting obligation, “aggregate cost” means both the employer and employee’s share of the cost of health coverage.  Generally, if the plan is insured, the full insurance premium is used for this purpose.  If the plan is self-funded, the COBRA rate less the 2% administrative fee is used.  The reporting is to be done in Box 12 of the W-2 using Code DD.

The reporting requirement applies to most types of health coverage.  There are exceptions for certain types of coverage such as health reimbursement arrangements and salary reduction contributions to flexible medical spending accounts.  For a more detailed list of plans subject to, or exempt from the Form W-2 requirements, see the Chart posted on the IRS website (Form W-2 Reporting of Employer-Sponsored Health Coverage), as well as the Questions and Answers.  It is also important to remember that if an individual’s health coverage changes during the year, such as from single coverage to family coverage, this must be tracked so that it can accurately be reflected on the W-2.

For more information, please refer to these CBIZ Health Reform Bulletins:

 

 

The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained herein is provided as general guidance and may be affected by changes in law or regulation.

The information contained herein is not intended to replace or substitute for accounting or other professional advice. Attorneys or tax advisors must be consulted for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained herein is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service. 

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