W-2 reporting for employer-sponsored healthcare will start in 2012
The IRS is holding an online webinar on October 31st which reviews the new requirement for employers to report the value of employer-sponsored healthcare coverage on employee’s Form W-2 beginning in 2012.
The cost of health insurance coverage that is made available to an employee by an employer and is excludable from the employee’s gross income under Code § 106 will have to be reported. Other coverage, such as coverage for Dental, Vision, Supplemental Coverage, Long Term Care Coverage and the like are excluded. Amounts contributed to an Archer MSA or an HSA, or salary reduction contributions to a Healthcare FSA are also excluded, although special rules apply. Small employers, defined as those who file fewer than 250 Forms W-2 for 2011, will not have to comply until 2013.
There are three basic methods for calculating the reportable cost: the COBRA applicable premium method, the premium charged method, and the modified COBRA premium method (where the employer subsidizes the COBRA cost or uses the prior year’s applicable premium as the COBRA premium).
According to the IRS announcement, the upcoming webinar will focus on:
- What changes employees will see in their Form W-2,
- When employers must begin reporting the benefits on the Form W-2,
- Transition relief for certain employers, plans, and situations,
- Which employers need to include the benefits on the Form W-2,
- How employers report the benefits on the Form W-2, and
- What valuation methods employers can use to determine the amounts to report on the Form W-2.
About the Author
Sara LaVallee is a Senior Vice President at WGA, where she focuses on full-scale service to large groups. Her role involves the handling of all lines of coverage in an account management and retention capacity.