Being a business owner is rough and it is down-right terrifying when you are reporting your own health care costs or your employees’ to the federal government. In between the confusing changes being made in the health care reform and the rumor mill constantly churning out misinformation you may feel like you are in the dark. However the IRS has just issued new guidance on reporting your health care costs on W-2 forms.
What do you need to know?
The Patient Protection and Affordable Care Act that was enacted in 2010 has added a new Code Section 6051(a)(14) which requires the aggregate cost of applicable employer-sponsored health coverage to be included in the information reported on the W-2 and given to employees.
Fortunately these new guidelines will not be put into place until next year’s taxes but the IRS urges that all employers start to plan for the changes now so they know exactly what to do in January.
Who has to report?
Any employer that offers employer-sponsored health care coverage under group plans must report. However there are two exceptions to this rule. (1) If you filed less than 250 forms of W-2 in the preceding calendar year and (2) if you are Tribal Indian Government you do not have to report.
What do I have to report?
Under the new Code of Section 6051(a)(14) the aggregate cost of “applicable employer-sponsored coverage” must be reported on the W-2 and your costs will be reported on Form W-2 in box 12 using code DD.
The costs that you must report are both the costs of the employee as well as the employer’s share of the costs. There are also exemptions to this including: The amount contributed to any HRA HSA or Archer MSA; the amount of a contribution to a health care spending arrangement by the employee; employer’s contributions to multiemployer plans; costs of stand-alone dental and vision plans; costs of self-insured group health plan that doesn’t have any federal continuation coverage requirements; costs of coverage provided by the government.
This is only the basics of the new Code Section 6051 (a)(14) and you should contact us to help in researching this matter further if you think you may fall into these new guidelines. Start preparing now even though your changes are still six months away. This will make the transition easier when the new laws go into effect. As always we encourage you to ask us any questions you have. You can call our office or contact us online.