The Patient Protection and Affordable Care Act (PPACA) requires that the aggregate cost of applicable employer-sponsored coverage be reported on an employee's Form W-2. This requirement first applies to the 2012 tax year, which means that employers will need to track this cost for reporting on the 2012 Form W-2 (generally issued in January 2013). The IRS published Notice 2011-28 (the Notice) to provide employers with needed guidance on this requirement. Importantly, the Notice excludes certain coverage from the "aggregate cost" calculation and exempts some employers from the requirement altogether.  

  • Until further guidance is issued, an employer can exclude the cost of coverage under a multiemployer plan; a health reimbursement arrangement; a stand-alone dental or vision plan; or a self-funded group health plan that is not subject to COBRA (e.g., a church plan) from its calculation of the "aggregate cost" of coverage.  
  • Until further guidance is issued, employers who were required to file fewer than 250 Form W-2s in the preceding calendar year are excluded from the reporting requirement.  
  • mployers do not need to report the aggregate cost for individuals who would not otherwise receive a Form W-2 (such as a retiree or a COBRA qualified beneficiary), or for employees who terminate employment during the year and request their Form W-2 prior to the end of the calendar year.  

The Notice also clarifies certain methodologies for calculating the aggregate cost, such as:  

  • When and how to include the amount of a health flexible spending arrangement in the aggregate cost.  
  • Alternative methods to calculate the aggregate cost of coverage for insured plans, plans that subsidize the COBRA premium, and plans that use a composite COBRA premium.