• The IRS recently issued Notice 2011-28 addressing employers' new Form W-2 reporting requirement for health coverage.
  • Reporting will be required on Form W-2s issued for the 2012 year (generally issued in January 2013).
  • The full value of employee major medical coverage must be reported on the Form W-2 in Box 12 using the code “DD”
  • The amount to be reported is the entire cost of the coverage under a major medical group health plan, without regard to
    • whether the plan is insured or self‐insured
    • the portion paid by the employee
    • any imputed income to the employee
    • the scope of the coverage
  • This "entire cost" is determined as follows:
    • For insured plans, the premium charged by the insurer should be reported as the cost of coverage.
    • For self-insured plans, the COBRA rates should be used (without the 2% administrative charge).
  • The employer must track the months the employee was enrolled and report only the aggregate cost for those months.
  • Certain benefits are not to be reported, including:
    • Dental or vision insurance under a separate policy
    • Coverage under an FSA, HSA or HRA
  • Small Employer Exception: Until future guidance is issued, reporting is optional for employers that filed fewer than 250 Forms W-2 for the prior year.
  • The cost of coverage must be reported on a calendar year basis, even if the policy or plan year is not the calendar year.