New 2012 IRS W-2 Reporting Requirements

June 11, 2012 | By SBS Payroll, Inc. 0 Comments

Under the Affordable Care Act, Employers are now required to report on the costs of coverage for Employer-Sponsored Group Health plans on W-2s in January 2013 for Calendar year 2012 and future Calendar years unless the employer meets the criteria for exemption which is listed below. The new reporting requirement is for the employee’s information only and is intended to provide useful and comparable consumer information on the cost of their health care coverage.

Q: What costs are included?

A:In general, the amount reported should include both the portion paid by the EMPLOYER and employee.

Q: Where are these costs reported on the 2012 W-2?

A:Box 12 with code DD to identify the amount.

Q: What about health FSA, how is this handled?

A:In the case of a health FSA, the amount reported should not include the amount of any salary reduction contributions.

Q: Which employers are currently exempt from the new requirement until further notice?

A.1. Federally recognized Indian tribal governments and employers that are tribally chartered corporations wholly owned by a Federally recognized Indian tribal government. 2. Employers that filed fewer than 250 W-2s for the previous calendar year (for example, employers that filed fewer than 250 W-2s for calendar year 2011 would not be required to report the cost of health plan coverage on W-2s for calendar year). 3. Employers that maintain self-insured plans that are not subject to COBRA continuation coverage. 4. Additionally if an employee terminates employment during the year and requests an early W-2, the employer is not required to include the health plan cost on the requested W-2.

Q: What if my payroll system does not store the EMPLOYER costs for my group health plans? What should I do?

A: You can contact SBS Payroll, Inc. at (949) 225-3019 to learn more about signing up for payroll services as the payroll software that SBS utilizes stores all EMPLOYER costs for benefits in the system and can already address these new requirements.

Q: Where can I learn more detailed information about the types of coverage that employers must report on the Form W-2?

A: The chart below below illustrates the types of coverage that employers must report on the Form W-2 or you can consult with your CPA. Certain items are listed as “optional” based on transitional relief provided by IRS Notice 2012-9 (http://www.irs.gov/pub/irs-drop/n-12-09.pdf) and restated and clarified by IRS Notice 2011-28 (http://www.irs.gov/pub/irs-drop/n-11-28.pdf).

     
Form W-2 Reporting of Employer-Sponsored Health Coverage
Coverage TypeForm W-2, Box 12, Code DD
ReportDo Not ReportOptional
Major medicalX
Dental or vision plan not integrated into another medical or health planX
Dental or vision plan which gives the choice of declining or electing and paying an additional premiumX
Health Flexible Spending Arrangement (FSA) funded solely by salary-reduction amountsX
Health FSA value for the plan year in excess of employee’s cafeteria plan salary reductions for all qualified benefitsX
Health Reimbursement Arrangement (HRA) contributionsX
Health Savings Arrangement (HAS) contributions (employer or employee)X
Archer Medical Savings Account (Archer MSA) contributions (employer or employee)X
Hospital indemnity or specified illness (insured or self-funded), paid on after-tax basisX
Hospital indemnity or specified illness (insured or self-funded), paid through salary reduction (pre-tax) or by employerX
Employee Assistance Plan (EAP) providing applicable employer-sponsored healthcare coverageRequired if employer charges a COBRA premiumOptional if employer does not charge a COBRA premium
On-site medical clinics providing applicable employer-sponsored healthcare coverageRequired if employer charges a COBRA premiumOptional if employer does not charge a COBRA premium
Wellness programs providing applicable employer-sponsored healthcare coverageRequired if employer charges a COBRA premiumOptional if employer does not charge a COBRA premium
Multi-employer plansX
Domestic partner coverage included in gross incomeX
Governmental plans providing coverage primarily for members of the military and their familiesX
Federally recognized Indian tribal government plans and plans of tribally charted corporations wholly owned by a federally recognized Indian tribal governmentX
Self-funded plans not subject to Federal COBRAX
Accident or disability incomeX
Long-term careX
Liability insuranceX
Supplemental liability insuranceX
Workers’ compensationX
Automobile medical payment insuranceX
Credit-only insuranceX
Excess reimbursement to highly compensated individual, included in gross incomeX
Payment/reimbursement of health insurance premiums for 2% shareholder-employee, included in gross incomeX
Other SituationsReportDo Not ReportOptional
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)X
Forms W-2 furnished to employees who terminate before the end of a calendar year and request, in writing, a Form W-2 before the end of that yearX
Forms W-2 provided by third-party sick-pay provider to employees of other employersX



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