Vision Payroll

October 28, 2011

Question of the Week: Do We Have to Report Health Insurance on Our W-2s?

Do We Have to Report Health Insurance on Our W-2s?
Do We Have to Report Health Insurance on Our W-2s?
This week’s question comes from Maria, an HR director.

Maria asks:

I keep hearing from our employees that we have to report the cost of health insurance on the Forms W-2 this year and that the employees will be taxed on it. Do we have to report health insurance on our W-2s?

Answer: As announced by the Internal Revenue Service in Notice 2010-69 and Notice 2011-28, reporting of the cost of health insurance has been postponed to at least 2012 for some employers and beyond that for the rest.

Notice 2010-69 Postponed Effective Date for All Employers

As previously reported, in Notice 2010-69 the Internal Revenue Service (IRS) postponed the requirement that health insurance be reported on Forms W-2. Originally, under the Patient Protection and Affordable Care Act of 2010, reporting was to begin on the 2011 Forms W-2, which are distributed to employees in January 2012. In order “to provide employers with additional time to make any necessary changes to their payroll systems or procedures in preparation for compliance with the reporting requirement,” the IRS postponed the reporting requirement until the 2012 Forms W-2, which are distributed to employees in January 2013.

Notice 2011-28 Further Postponed Deadline for Many Employers

In Notice 2011-28, the IRS further postponed the deadline for employers who are required to file less than 250 Forms W-2. Employers who are required to file fewer than 250 Forms W-2 for calendar year 2011 will not be required to report health insurance on Form W-2 in 2012. Furthermore, until further guidance is issued by the IRS, any employer required to file fewer than 250 Forms W-2 in a calendar year will not be required to report the health insurance on Form W-2 for the following year.

Notice 2011-28 Does not Cause Excludable Employer-Provided Health Care Coverage to Become Taxable

According to Notice 2011-28, nothing in §6051(a)(14), Notice 2011-28, or the additional guidance that is contemplated under §6051(a)(14), causes or will cause otherwise excludable employer-provided health care coverage to become taxable.

Contact Vision Payroll Today

Contact Vision Payroll today if you have further questions on 2011 Form W-2 reporting for health coverage.

October 13, 2010

Tip of the Week: IRS Delays Health Care Reporting Requirement on Form W-2

IRS Delays Health Care Reporting Requirement on Form W-2
IRS Delays Health Care Reporting Requirement on Form W-2
In Notice 2010-69, the Internal Revenue Service (IRS) announced that the reporting of the cost of coverage under an employer-sponsored group health plan on Form W-2, Wage and Tax Statement, would not be mandatory for 2011 Forms W-2.

Additional Time Is Needed to Make Changes to Payroll Systems

According to Notice 2010-69, “[t]he Treasury Department and the IRS have determined that this relief is appropriate to provide employers with additional time to make any necessary changes to their payroll systems or procedures in preparation for compliance with the reporting requirement.”

Aggregate Cost Determined Using COBRA Rules

When reporting begins, “the aggregate cost is to be determined under rules similar to the rules of §4980B(f)(4), referring to the definition of the “applicable premium” under the rules providing for COBRA continuation coverage.”

Vision Payroll Will Assist Employers in Transition to New Rules

Contact Vision Payroll today for assistance in planning your transition to the new reporting rules for Form W-2.

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