On October 12, 2010, the IRS granted temporary relief for 2011 from the Patient Protection and Affordable Care Act (PPACA) requirement to report the cost of employer-sponsored group health care on Form W-2.

Background

PPACA added section 6051(a)(14) to the Internal Revenue Code (Code), generally stating that the aggregate cost of applicable employer-sponsored coverage must now be reported on Form W-2. Employer-sponsored coverage means coverage under any group health plan made available to employees by their employer that is excludable from the employees' gross income. In addition, Code section 6051(a)(14) requires that the aggregate cost be determined under rules similar to those for determining the "applicable premium" under the rules providing for COBRA continuation coverage. By statute, Code section 6051(a)(14) is effective for taxable years beginning on or after January 1, 2011.

Interim Relief

The IRS issued Notice 2010-69 to provide interim relief from Code section 6051 requirements. As a result, employers do not need to report the aggregate cost of employer-sponsored group health coverage on Forms W-2 issued for 2011. The IRS will not treat an employer as failing to meet the requirements of Code section 6051 for 2011 and the employer will not be subject to any related penalties. This relief allows employers additional time to prepare for compliance with Code section 6051's reporting requirement. The IRS also notes in the Notice that it anticipates issuing guidance on the reporting requirement before the end of 2010.

In conjunction with Notice 2010-69, the IRS also issued a draft Form W-2 for use in 2011. The draft Form W-2 allows for the reporting of employer-sponsored coverage in box 12. The draft form is available for review at http://www.irs.ustreas.gov/pub/irs-utl/draft_w-2.pdf .