Updated Guidance for Reporting Employer-Sponsored Health Coverage on Form W-2

Updated Guidance for Reporting Employer-Sponsored Health Coverage on Form W-2

New guidance from the IRS provides additional information for employers that are subject to the requirement under Health Care Reform to report the value of the health insurance coverage they provide employees beginning with 2012 Forms W-2 (generally furnished to employees in January 2013).

The requirement continues to be optional for smaller employers filing fewer than 250 Forms W-2 in the preceding calendar year unless and until further guidance is issued (but be sure to comply with any state-specific requirements regarding reporting the cost of health coverage provided to adult children).

New Guidance Updates Information on How to Report, Coverage to Include, and Determining Costs of Coverage
Among other things, the new guidance:

– Clarifies the application of the interim relief from the reporting requirement for employers filing fewer than 250 Forms W-2 for the preceding calendar year;
– Adds a new example that demonstrates that the reporting requirement does not apply to coverage under a health flexible spending arrangement (FSA) if contributions occur only through employee salary reduction elections; and
– Provides that employers are not required to include the cost of coverage under an employee assistance program (EAP), wellness program, or on-site medical clinic in the reportable amount if the employer does not charge a premium with respect to that type of coverage provided under COBRA to a qualifying beneficiary.

Additional Information
To read the new guidance in its entirety, see Notice 2012-9. You can also view the Frequently Asked Questions regarding this requirement from the IRS.