FORM W-2 REPORTING OF HEALTH CARE COSTS IN 2012
(This matrix including changes made by IRS Notice 2012-9 and
revises the Leavitt matrix dated December 5, 2011)
(This matrix including changes made by IRS Notice 2012-9 and
revises the Leavitt matrix dated December 5, 2011)
Large employers –-defined as those who issue at least 250 W-2s for 2011—are required to report the aggregate cost of applicable employer-sponsored group health coverage on Form W-2 starting with the 2012 tax year. Such employers should ensure that procedures are in place to capture the necessary information each payroll period. In January 2012 the IRS made several changes and clarifications to its 2011 guidance on what costs employers must include in reportable aggregate cost. This reporting requirement applies to both grandfathered and non-grandfathered plans but does not apply to smaller employers until the 2013 tax year. Reportable aggregate cost includes both employer contributions and pre-tax and after-tax employee contributions. Aggregate reportable and non-reportable costs are defined in IRS Notice 2012-9 and should be reported in box 12 on Form W-2, using code DD. Reporting is for informational purposes only; it does not affect the taxability of the coverage.
IRS Notice 2012-9 provides that an employer may elect to report the cost of coverage it is not required to include, provided the coverage constitutes applicable employer-sponsored coverage and otherwise meets the Notice’s requirements on allowable methods of calculating costs.
| TYPE OF COVERAGE OR COST | REPORT ON W-2 | DO NOT REPORT ON W-2 | |
| Group medical coverage for employee, spouse & covered dependents. Covered dependents include any person covered by the plan because of a relationship to the employee, whether or not the individual is a dependent per the tax code, e.g., 25-year old adult child who is not a tax dependent, or a domestic partner who is not a tax dependent. | X | ||
| Dental or vision coverage that is integrated into the group medical plan, i.e., insured medical and dental provided under the same contract; or self-funded dental or vision that is bundled or integrated with self-funded medical. | X | ||
| Dental or vision coverage that meets the HIPAA definition of “excepted benefits,” i.e., insured dental and vision are provided under a separate contract from medical benefits; or self-funded dental or vision that participants can elect not to receive, and if they elect to receive it, they must pay an additional contribution for it. | X | ||
| Voluntary hospital indemnity policies or other fixed indemnity policies – where such coverage is provided by the employer on an excludible or pre-tax basis. | X | ||
| Voluntary hospital indemnity policies or other fixed indemnity policies – where such coverage is funded by the employee on an after-tax basis. | X | ||
| Employee assistance program (EAP), wellness program or on-site medical clinic, if employer does charge a premium for such coverage under COBRA to qualified beneficiaries. | X | ||
| Employee assistance program (EAP), wellness program or on-site medical clinic, if employer does not charge a premium for such coverage under COBRA to qualified beneficiaries. (Although employer is not required to include these costs in aggregate reportable coverage, it can elect to if it wishes.) | X | ||
| TYPE OF COVERAGE OR COST | REPORT ON W-2 | DO NOTREPORT ON W-2 | |
| Voluntary coverage for specific disease or illness, such as cancer policies — where such coverage is funded by the employee on an after-tax basis. | X | ||
| Health Flexible Spending Account (HFSA) pre-tax contributions by employee. | X | ||
| Archer Medical Savings Account (MSA) contributions. | X | ||
| Health Savings Account (H.S.A.) contributions. | X | ||
| Long-Term Care coverage. | X | ||
| Health Reimbursement Arrangement (HRA) contributions and coverage. (Employer may elect to report HRA costs, although not required to.) | X | ||
| Medical coverage provided to an individual employed by related employers: | If each employer issues a separate W-2 | X | |
| If one employer is the commonpaymaster for all wages paid to the individual: | Common paymasterX | Other employers X | |
| Secondary or Incidental insurance benefits such as: coverage for accident or disability income insurance, medical benefits insurance issued as a supplement to liability insurance or under auto liability insurance, workers’ compensation insurance, credit-only insurance, or other similar insurance (please see IRC section 9832(c)(1)). | X | ||
| Employer contributions to multi-employer plans for employee health coverage | X | ||
| Excess reimbursements of highly compensated individuals (HCIs) under IRC section 105(h), even though the excess reimbursements are included in income of the affected HCIs. (Report this amount on the W-2 as income, but not in Box 12.) | X | ||
| Coverage under a self-funded group health plan that is not subject to any federal continuation coverage requirements, e.g., a self-funded church plan. | X | ||
| Coverage under a plan maintained primarily for members of the military or for their families that is provided and maintained by any governmental entity (e.g., federal government, state or local) | X | ||
| Employer-sponsored health care provided to retirees or other former employees for whom the employer is not otherwise required to issue Form W-2s. | X | ||
| Coverage under a medical plan sponsored by an employer that is a Federally recognized Indian tribal government. | X | ||
This publication is intended for general information purposes only and is not intended or provided as legal advice. Consult with legal counsel to determine how laws or regulations discussed herein apply to your specific circumstances. Consult your employee benefits attorney for specific questions related to your obligations under the PPACA. Copyright ©2012 LGAA, Inc. All rights reserved. Permission is granted to reprint this Bulletin, as long as you credit The Leavitt Group/ LGAA, Inc. with authorship. If you have questions, contact Lisa-Klinger@Leavitt.com