Revisiting W-2 Reporting of the Cost of Health Care Coverage

On October 31^st, the IRS conducted an informative webinar which should be available shortly on their website.  In addition, the IRS has a Questions and Answers page on their website. 

Here are some highlights:

Who must report the aggregate cost of employer sponsored health plan coverage?

Generally, employers who issue 250 or more W-2s in 2011. The IRS noted that the current guidance (Notice 2011-28) is interim guidance.  Any changes will be prospective and only upon issuance of further IRS guidance providing at least 6 months advance notice.

Are both employee and employer contributions reported?

Yes, the amount reported includes both employee and employer contributions even if employee contributions are pre-tax.  There is a special rule for health care FSAs.

Where is the cost information reported?

The cost is reported in Box 12 of the W-2 with code DD but is not reported on the W-3.

To read more refer to our ErisaALERT 2011-14  and ErisaALERT 2011-5