On January 3, 2012, the Internal Revenue Service released Notice 2012-9 (an ammendment of Notice 2011-28) providing interim guidance on the W-2 reporting requirement. The guidance clarifies that employers distributing fewer than 250 W-2s in 2011 are not required to report the the cost of employer-sponsored health insurance on the Form W-2 issued in 2012.
This requirement has been extended to January 2013, when employers issue W-2s for the 2012 tax year. In addition, Notice 2012-9 restates and amends its guidance to clarify several points and address additional issues. Here are some highlights.
- Employers subject to the requirement: the revised guidance clarifies that federally recognized Indian tribal governments are exempt until further guidance is issued.
- Types of healthcare coverage that will not be reported: the reporting requirement does not apply to health FSA coverage that is solely funded through the employee; the cost of coverage under a dental or vision plan (previously this exception was described as dental or vision plan “not integrated into a group health plan providing additional health care coverage.”); any coverage for long-term care; any amounts contributed to Health Saving Account (HSA); any coverage for a specified disease or illness and hospital indemnity or other fixed indemnity insurance, if the employee pays the premiums for the coverage on an after-tax basis; the cost of coverage under a Health Reimbusrment Account (HRA); the cost of coverage under a multiemployer plan; the cost of coverage provided under a self-insured group health plan that is not subject to any federal continuation coverage requirements.
- Calculating the cost of coverage: Employers may calculate the cost of coverage under a plan using the applicable COBRA premium for the coverage. Other permissible cost calculation method is to use the premium charged by the insurer in the case of insured plans.The chosen method of reportable cost of coverage must be used consistently.
- Other Issues. The guidance explains that the reportable cost of coverage may be based on the information available to the employer as of December 31, and need not be adjusted for later elections or notifications (e.g., a divorce or other change in family status) that retroactively affect coverage during the prior year. Other issues addressed include how the reporting requirement applies to related employers, reporting for programs that include health and non-health benefits, and coverage provided during a payroll period that straddles two calendar years.
For additional information on this topic, please see Notice 2012-9 on the IRS page.