The New Health Care Law W-2 Reporting
Health Care Coverage Reporting Requirements
Now that the Supreme Court has ruled and upheld the Patient Protection and Affordable Care Act (otherwise known as the New Health Care Law), employers will need to start focusing in earnest on the Act’s requirements. Some parts of the Act have gone into effect already, but most of the major provisions of the Act have not yet started, with the biggest changes commencing in 2014.
One of the Act’s requirements that is going into effect beginning in January 2013 is the requirement that employers must report the value of employees’ health benefits on their W-2 forms. This requirement was optional for 2011. The amount reported should include both the portion paid by the employer and the portion paid by the employee. According to the IRS, this reporting of the cost of an employee’s health care benefits will not cause this amount to become taxable income. Instead, it is designed to provide employees with useful and comparable information about the cost of health care coverage.
All employers who are subject to the Act (employers with 50 or more full-time employees) will have to comply with this requirement eventually, but compliance with this provision has been dived into two phases. Large employers (those who file 250 or more W-2 forms) must comply with the provision for tax year 2012 W-2 forms, which should be filed in January 2013. (Reporting is optional for small employers for tax year 2013.) All employers, thus including small employers, must comply with this provision for tax year 2013 W-2 forms, which would be filed in January 2014.
This will be one of a series of changes that the New Health Care Law will bring about for employers, and the Act’s impact on employers will continue to grow as additional provisions take effect.