Form W-2: Report Employer Provided Health Care Coverage

Jan 13 2014 - Benefits, Health Care Reform - Gail Cecchettini Whaley

The Affordable Care Act requires employers to report the cost of an employee’s health care coverage under an employer-sponsored group health care plan on an employee’s Form W-2.

This reporting requirement does not make the benefit taxable. The value of the benefit continues to be excludable from an employee’s income. The reporting requirement is “for informational purposes only and will provide employees useful and comparable consumer information on the cost of their health insurance,” according to the Internal Revenue Service (IRS).

The value of the health care coverage is reported in Box 12, using Code DD.

The IRS provides helpful information regarding the reporting requirement, including a chart that details the type of coverage that must be reported on the Form W-2.

Certain small businesses are eligible for transition relief from the reporting requirement for tax-year 2012 and beyond, until the IRS issues final guidance for this reporting requirement. The IRS notes that the reporting requirement is “optional” for “employers required to file fewer than 250 Forms W-2 for the preceding calendar year (determined without application of any entity aggregation rules for related employers.”

Reminder: January 31 Deadline

Don’t forget that you must furnish the W-2 by January 31, 2014.

According to the IRS:

  • You must give Copies B, C and 2 of Form W-2 to the employee by January 31.
  • If an employee stops working for you before the end of the year, you may give your former employee Form W-2 anytime prior to January 31, but no later than January 31.
  • If a terminated employee asks for the Form W-2, you must give Copies B, C and 2 to the employee within 30 days of the request, or within 30 days of the final wage payment, whichever is later.

Gail Cecchettini Whaley, CalChamber Employment Law Counsel/Content

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