On March 29, 2011, the Internal Revenue Service (IRS) issued interim guidance (Notice 2011-28) on how employers will be required to inform employees of the cost of their “applicable” employer-sponsored group health plan coverage. This informational reporting is required as part of the Affordable Care Act (aka PPACA) to provide comparable information to employees to inform them of the cost of their health care coverage. This is an informational reporting obligation and does not cause excludable employer provided health care coverage to become taxable. HIPAA “excepted benefits” plans are not subject to the W-2 reporting requirements (e.g., accident, disability income, supplemental liability, workers’ compensation insurance). In addition, amounts contributed to an Archer MSA, FSA, HSA and HRA are not reportable.
The guidance makes clear that the reporting requirements generally apply beginning with the 2012 W-2 forms (required for the calendar year 2012 to be furnished to employees in January 2013). Employers are not required to report the cost of health coverage on any forms required to be furnished to employees prior to January 2013. Employers must provide the written statement before January 31 of the succeeding year. Employees who terminate employment mid-year must receive the report within 30 days after the employee requests a copy. Notice 2010-69, issued last fall, made the reporting requirement optional for all employers for the 2011 Forms W-2 (generally furnished to employees in January 2012). Employers may rely on the guidance provided in this Notice if they voluntarily choose to report the cost of coverage on 2011 Forms W-2.
Using a question-and-answer format, the Notice includes information on how to complete the reporting, what employers are impacted and the coverage that needs to be included, and how to determine the cost of the coverage.
The Notice also provides additional transition relief for certain employers. This includes smaller employers that are required to file fewer than two hundred and fifty 2011 W-2 forms. These small employers will not be required to report the cost of health coverage on any forms required to be furnished to employees prior to January 2014. This transition relief will continue until the issuance of further guidance. To the extent that future guidance impacts additional employers, or categories of employers, or additional types of coverage, this supplemental guidance will apply prospectively only and will not apply to any calendar year beginning within six months of the date the guidance is issued.