The Health Care Reform law requires employers to report the cost of employer-sponsored health care coverage on employees' W-2 Forms. This reporting is applicable for the 2012 calendar year.
In March 2011, the IRS issued interim guidance in Notice 2011-28, and on January 3, 2012, issued additional interim guidance Notice 2012-09 in response to comments on the reporting requirement.
The IRS continues to emphasize that the W-2 reporting obligation does not make employer-sponsored health coverage taxable. Notice 2012-09 updates and clarifies previously issued interim guidance for several important requirements. Employers may want to review their course of action to determine if it is still on target.
Who Has To Report
Click here to find out if your business is required to report.
Benefits To Include and Exclude
Click here to for a list of benefits to include and exclude.
How To Calculate Benefits
Click here to find out how to calculate benefits.
W-2 Reporting Worksheet
Click here to view and print the W-2 Reporting Worksheet.
W-2 Reporting FAQs
Click here to find out more about W-2 Reporting.
W-2 Reporting Hot Topics & FAQs
- What's the penalty for not reporting the correct amount on the Form W-2?
Answer: Good question, and the answer isn't entirely clear at this point. Existing law imposes penalties when a Form W-2 doesn't include correct information. The amount of the penalty varies, depending on when the corrected Form W-2 is filed (from $30 to $100 per form, with maximum penalties for small businesses), and higher penalties apply for intentional reporting errors or omissions ($200 per form, with no maximums). Existing law also includes exceptions – no penalties are applied if Form W-2 reporting errors are inconsequential or due to reasonable cause, and penalties are limited if Form W-2s are filed timely and reporting errors are corrected by August 2nd. Because the IRS hasn't yet finalized the W-2 reporting requirements for health care coverage, it remains to be seen how strictly the IRS will enforce W-2 penalties for failing to report accurate health information.
- Does the new W-2 reporting mean that the employee will pay taxes on the value of the employer-sponsored health coverage? Or will it only be taxable if it is deemed a Cadillac Plan?
Answer: No, the W-2 reporting requirement does not mean that employees will pay taxes on the value of the employer-sponsored health coverage. The amounts reported are not included in income. The Form W-2 reporting takes effect in 2012 and is unrelated to the excise tax that takes effect in 2018 ("Cadillac Tax"). If the Cadillac Tax applies in 2018, the tax is owed by the insurance company, plan administrator, or employer - not the employee.
American Fidelity Assurance Company does not provide tax or legal advice.