Employers required to file 250 or more W-2 forms will be responsible for reporting to employees the total cost of their group health benefit plan coverage on their W-2 forms under the Patient Protection and Affordable Care Act (the Act). Employers filing fewer than 250 W-2 forms will not be required to report the cost of health coverage. This transition relief will continue until further guidance is issued. Any supplemental guidance will not apply to any calendar year beginning within six months of the date the guidance is issued.
This requirement is informational only and does not mean that employer-provided coverage will be subject to income tax.
This requirement was effective with the 2012 W-2 forms distributed to employees in January 2013.
The cost of coverage generally includes both the portion of the cost paid by the employer and the portion of the cost paid by the employee, regardless of whether the employee paid for that cost through pre-tax or after-tax contributions.
Only covered employees that elect the coverage and pay the premiums or contribution amounts receive cost of coverage information on their W-2 forms. Beneficiaries and dependents will not receive the cost of coverage.
Coverage that does not need to be reported
HIPAA "excepted benefits" plans are not subject to the W-2 reporting requirements (accident, disability income, supplemental liability, workers' compensation insurance). Stand-alone dental and vision plans are also not subject to the requirements. Coverage under an HRA, amounts contributed to an HSA or an Archer MSA, as well as salary reduction contributions to a health FSA are not reportable. In addition, employee assistance programs (EAP), wellness programs, or on-site medical clinics, if the employer does not charge a premium for this type of coverage, are not reportable on the W-2.
Ultimately, it is the employer's responsibility to accurately determine which employees should receive cost of coverage information. Employers are encouraged to consult with their legal counsel or tax preparer for advice on who should be included and what should be reported to meet the W-2 reporting requirement.
For More Information
- Self-funded Flier(Opens a new window): Calculating and Reporting W-2 Cost of Coverage Information (PDF)
- Fully Insured Flier(Opens a new window): Calculating and Reporting W-2 Cost of Coverage Information (PDF)
- IRS Recap of What to Report(Opens a new window)
- IRS Notice 2012-9(Opens a new window) (PDF)