Question: Which employers are subject to the ACA Form W-2 cost of coverage reporting? What coverage must be reported?
Compliance Team Response:
Employers Subject to Form W-2 Cost of Coverage Reporting
The Form W-2 cost of coverage reporting in Box 12 using code DD was added in the ACA, effective for 2012, and remains in effect. However, it currently applies only to employers that filed 250 or more Forms W-2 in the preceding calendar year.
Therefore, an employer is not required to report the Form W-2 cost of coverage until the calendar year following the first calendar year in which it files 250 or more Forms W-2.
If the employer did not file at least 250 Forms W-2 for the 2016 calendar year at the beginning of 2017, it is not subject to the Form W-2 cost of coverage reporting for the 2017 calendar year at the beginning of 2018.
Completing the Box 12 Code DD Reporting
If the employer is subject to the reporting, the cost of coverage must be reported in Box 12 using Code DD. It includes the full amount of the cost of coverage (i.e., both the employer-share and employee-share of the premium).
Where Can I Find More General Information?
The IRS has a helpful set of FAQs posted here: https://www.irs.gov/newsroom/employer-provided-health-coverage-informational-reporting-requirements-questions-and-answers
Which Coverage Must Be Reported
The IRS has a useful chart detailing what must be included here:
http://www.irs.gov/Affordable-Care-Act/Form-W-2-Reporting-of-Employer-Sponsored-Health-Coverage
Form W-2 Reporting of Employer-Sponsored Health Coverage
| Coverage Type | Form W-2, Box 12, Code DD | ||
| Report | Do Not Report | Optional | |
| Major medical | X | ||
| Dental or vision plan not integrated into another medical or health plan | X | ||
| Dental or vision plan which gives the choice of declining or electing and paying an additional premium | X | ||
| Health Flexible Spending Arrangement (FSA) funded solely by salary-reduction amounts | X | ||
| Health FSA value for the plan year in excess of employee’s cafeteria plan salary reductions for all qualified benefits | X | ||
| Health Reimbursement Arrangement (HRA) contributions | X | ||
| Health Savings Arrangement (HSA) contributions (employer or employee) | X | ||
| Archer Medical Savings Account (Archer MSA) contributions (employer or employee) | X | ||
| Hospital indemnity or specified illness (insured or self-funded), paid on after-tax basis | X | ||
| Hospital indemnity or specified illness (insured or self-funded), paid through salary reduction (pre-tax) or by employer | X | ||
| Employee Assistance Plan (EAP) providing applicable employer-sponsored healthcare coverage | Required if employer charges a COBRA premium | Optional if employer does not charge a COBRA premium | |
| On-site medical clinics providing applicable employer-sponsored healthcare coverage | Required if employer charges a COBRA premium | Optional if employer does not charge a COBRA premium | |
| Wellness programs providing applicable employer-sponsored healthcare coverage | Required if employer charges a COBRA premium | Optional if employer does not charge a COBRA premium | |
| Multi-employer plans | X | ||
| Domestic partner coverage included in gross income | X | ||
| Governmental plans providing coverage primarily for members of the military and their families | X | ||
| Federally recognized Indian tribal government plans and plans of tribally charted corporations wholly owned by a federally recognized Indian tribal government | X | ||
| Self-funded plans not subject to Federal COBRA | X | ||
| Accident or disability income | X | ||
| Long-term care | X | ||
| Liability insurance | X | ||
| Supplemental liability insurance | X | ||
| Workers’ compensation | X | ||
| Automobile medical payment insurance | X | ||
| Credit-only insurance | X | ||
| Excess reimbursement to highly compensated individual, included in gross income | X | ||
| Payment/reimbursement of health insurance premiums for 2% shareholder-employee, included in gross income | X | ||
| Other Situations | Report | Do Not Report | Optional |
| Employers required to file fewer than 250 Forms W-2 for the preceding calendar year (determined without application of any entity aggregation rules for related employers) | X | ||
| Forms W-2 furnished to employees who terminate before the end of a calendar year and request, in writing, a Form W-2 before the end of that year | X | ||
| Forms W-2 provided by third-party sick-pay provider to employees of other employers | X | ||
Regulations:
IRS Notice 2012-9: http://www.irs.gov/pub/irs-drop/n-12-09.pdf
Also, in the case of the 2012 Forms W-2 (and Forms W-2 for later years unless and until further guidance is issued), an employer is not subject to the reporting requirement for any calendar year if the employer was required to file fewer than 250 Forms W-2 for the preceding calendar year.
Q4. What transition relief is being provided by Notice 2012-9? To which employers and types of coverage does it apply and how long does it last?
- For certain employers and with respect to certain types of coverage listed below, the requirement to report the cost of coverage will not apply for the 2012 Forms W-2 (the forms required for the calendar year 2012 that employers generally are required to provide employees in January 2013) and will not apply for future calendar years until the IRS publishes guidance giving at least six months of advance notice of any change to the transition relief. However, reporting by these employers and for these types of coverages may be made on a voluntary basis.
The transition relief applies to the following:
(1) employers filing fewer than 250 Forms W-2 for the previous calendar year (for example, employers filing fewer than 250 2012 Forms W-2 (meaning Forms W-2 for the calendar year 2012, which generally are filed with the SSA in early 2013) will not be required to report the cost of coverage on the 2013 Forms W-2 (which generally are filed with the SSA in early 2014). For purposes of this relief, the number of Forms W-2 the employer files includes any forms it files itself and any filed on its behalf by an agent under § 3504 (see Q&A-3 of Notice 2012-9 for more information). In addition, for purposes of this relief, the employer is determined without the application of any aggregation rules;
Disclaimer: The intent of this analysis is to provide the recipient with general information regarding the status of, and/or potential concerns related to, the recipient’s current employee benefits issues. This analysis does not necessarily fully address the recipient’s specific issue, and it should not be construed as, nor is it intended to provide, legal advice. Furthermore, this message does not establish an attorney-client relationship. Questions regarding specific issues should be addressed to the person(s) who provide legal advice to the recipient regarding employee benefits issues (e.g., the recipient’s general counsel or an attorney hired by the recipient who specializes in employee benefits law).
