That means that on W-2 forms that go out in January 2013, the cost of this coverage must be listed. But this cost is not taxable income and continues to be excluded from an employee’s income.
The information can provide employees with helpful consumer information. If they are shopping for health care coverage, it gives them an idea of the cost of their current coverage.
The new ruling includes most employers. Federally recognized Indian tribal governments are exempt from the requirement, as are plans maintained primarily for members of the military and their dependents. Employers are not required to send W-2 forms only for the purpose of providing this information, so they do not have to send the form for retirees or others who have coverage, but no income.
In general, the amount to be reported in Box 12 of the W-2 form will include both the amount paid by the employer and the amount paid by the employee.
Among the types of coverage that must be reported:
Health FSA value in excess of an employee’s cafeteria plan salary reductions for all qualified benefits
Hospital indemnity of specified illness paid through salary reduction (pre-tax) or by employer
Employee Assistance Plan (EAP), wellness programs or on-site medical clinics providing applicable employer-sponsored coverage (this is required if employers charges a COBRA premium)
Domestic partner coverage included in gross income
The items listed above are types of coverage that must be listed as of current guidelines. These are subject to change, but future revisions will not go into effect until the tax year beginning at least six months after the revision is announced.
Let DirectPay help you sort through the new requirements. Your DirectPay specialist can answer any questions you have on reporting. Contact us today!