- COBRA Applicable Premium: Aggregate values are based on the COBRA premium rate.
- Premium Charged: Aggregate values are based on the premium charged by the insurer for the employee’s coverage
- Modified COBRA Premium: For employers who subsidize COBRA, report the cost of coverage by using a reasonable amount of the COBRA applicable premium.
- Composite Rate: Report the value of coverages provided by a plan with composite rates, based on the rates for self-only, self-and-spouse and family rate.
What impact does the reporting have on employers?
This will mean increased adminstrative responsibility for employer and third-party vendors who complete company W-2s. It will also help employers – and the government – to track the value of tax free health insurance premiums. The penalties for failure to comply are the same as those applicable to W-2 reporting. They range from $30 to $100 per W-2 and is capped for small businesses.
What impact does the reporting have on employees?
Individuals are not impacted by this information on their W-2. The cost of the benefits reported will not increase their taxable income.
Additional information is provided at the IRS website at www.irs.gov