Employee Benefits Compliance, Large Employers, Reporting & Disclosure, Reporting Requirements

Reporting Total Health Care Costs on W-2s: A Short Recap


Since we are still getting questions from some employers, here is a brief recap of the PPACA requirement that large employers report the total cost of employer-sponsored group health coverage on 2012 W-2s that must be issued by January 31, 2013.

What Employers Must Report?

Employers who issued at least 250 W-2s in 2011 must report on 2012 W-2s.  The 250 W-2s include those for all employees, whether you classified them as full-time, part-time, seasonal or temporary employees.

What Data Must be Reported on the W-2?

  • Employer and Employee contributions for major medical and prescription drug coverage
  • Employer contribution for health flexible spending accounts (HFSAs) (and payments from HFSAs) that exceed the employee’s pre-tax HFSA contribution for the year
  • Employee pre-tax contribution for hospital indemnity or specific illness policies (e.g., AFLAC cancer policy)
  • Domestic partner coverage included in the employee’s gross income
  • Cost of Employee Assistance Plan (EAP), wellness program and onsite medical clinic, only if they provide “healthcare” coverage and employer charges a COBRA premium for  continued coverage.

Suggestions on where to Find the Data You Need to Report

  • Insured plan sponsors: Review your 2012 bills from you carrier
  • Self-insured plan sponsors:  contact your COBRA vendor for a COBRA rate
  • Review each employee’s 2012 payroll data (for pre-tax contributions to hospital indemnity or specific illness plans, and for imputed income for domestic partner coverage)

What Data Are You Not Required to Report on the W-2s?

  • Dental or vision coverage that gives the choice of declining, or electing and paying an additional premium (but employer can choose to report)
  • Dental or vision that is not integrated with a major medical plan (but employer can choose to report)
  • Employee pre-tax contributions to a health flexible spending account (HFSA)
  • Health Reimbursement Account (HRA) contributions (but employer can choose to report)
  • Health Savings Account (HSA) contributions by the employer or employee
  • Hospital indemnity or specific illness policies (e.g., AFLAC cancer policy) paid by the employee on an after-tax basis

Additional Information

  • Report the health care cost information in Box 12 of the W-2, using Code DD
  • The reporting is for informational purposes only.  It does not change the taxability of the benefits.