The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan. Reporting the cost of health care coverage on Form W-2 does not mean that the coverage is taxable. The value of the employer’s excludable contribution to health coverage remains excludable from an employee’s earnings and is not subject to tax. This report is for informational purposes only and will provide employees with useful and comparable consumer information about the cost of their health care coverage.
Employers who provide “applicable employer-sponsored coverage” under a group health plan are subject to the reporting requirement. this includes businesses, tax-exempt organizations, and federal, state, and local government entities (except with respect to plans maintained primarily for members of the military and their families). however, federally recognized Indian tribal governments are not subject to this requirement.
transitional relief
For certain employers, types of coverage, and situations, there is a transition relief from the requirement to report the value of coverage beginning with the 2012 Forms W-2. This transition relief was first applied to Forms 2013 W-2s that were issued in 2014. The relief applies for the 2015 tax year and will continue to apply to future calendar years until the IRS issues additional guidance. (Note: Employers are generally required to provide employees with 2015 W-2 forms in January 2016.) Any guidance that expands reporting requirements will apply only to calendar years beginning at least six months after the guidance is issued. See the “optional reporting” column in the chart below for employers, coverage types, and situations eligible for transition relief.
report on form w-2
Employers who are subject to this requirement must report the value of the health care coverage in box 12 of Form W-2pdf, with code dd to identify the amount. the total of these amounts for all employees of the employer is not reported on the w-3 form.
In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee. see the chart below and the questions and answers for more information.
An employer is not required to issue a Form W-2 solely to report the value of health care coverage for retirees or other employees or former employees for whom the employer would not provide a Form W-2.
The following table illustrates the types of coverage that employers must report on Form W-2. Certain items are listed as “optional” under the transitional relief provided by Notice 2012-9pdf (Reaffirmation and Clarification Notice 2011-28pdf). future guidance may revise the reporting requirements, but they will not be applicable until the fiscal year beginning at least six months after the date of issuance of such guidance.
The box revises the reporting requirements for box 12, code dd, and has no impact on the requirements to report these items elsewhere. For example, while health savings agreement (HSA) contributions are not required to be reported in Box 12, Code DD, certain HSA contributions are reported in Box 12, Code W (see General Instructions for Forms W -2 and w-3pdf).
form w-2 reporting employer sponsored health coverage
type of coverage
report
major medicine
x
dental or vision plan not integrated with another health or medical plan
x
dental or vision plan that gives you the option to decline or choose and pay an additional premium
x
health flexible spending arrangement (fsa) funded solely by salary reduction amounts
x
health fsa value for plan year in excess of employee cafeteria plan salary reductions for all qualified benefits
x
health reimbursement arrangement (hra) contributions
x
health savings plan (hsa) contributions (employer or employee)
x
archer medical savings account (archer msa) contributions (employer or employee)
x
specific illness or hospital indemnity (insured or self-funded), paid after tax
x
specific disease or hospital indemnity (insured or self-funded), paid by salary reduction (before taxes) or by the employer
x
employee assistance plan (eap) that provides applicable employer-sponsored health care coverage
required if the employer charges a premium
optional if the employer does not charge a premium
on-site medical clinics providing applicable employer-sponsored health care coverage
required if the employer charges a premium
optional if the employer does not charge a premium
wellness programs that provide applicable employer-sponsored health care coverage
required if the employer charges a premium
optional if the employer does not charge a premium
multi-employer plans
x
domestic partner coverage included in gross income
x
Government plans that provide coverage primarily for members of the military and their families
x
federally recognized Indian tribal government plans and tribally registered corporation plans wholly owned by a federally recognized Indian tribal government
x
self-funded plans not subject to federal charges
x
income due to accident or disability
x
long-term care
x
civil liability insurance
x
complementary civil liability insurance
x
workers compensation
x
automobile medical payment insurance
x
credit only insurance
x
excess reimbursement to highly compensated individual, included in gross income
x
payment/reimbursement of health insurance premiums for the 2% shareholder-employee, included in gross income
x
related information:
- ir-2011-31, irs issues interim guidance on informational reporting of employer-sponsored health coverage
- Notice 2010-69, Provisional Relief Regarding Form W-2 Reporting Cost of Group Health Insurance Coverage Under ยง 6051(a)(14)pdf
- webinar, report on employer health care coverage on form w-2
