W-2 reporting requirements: What employers need to know

About the requirement

With the start of a new year, public employers, both fully-insured and self-insured should consider how the Affordable Care Act (ACA) has changed W-2 form reporting requirements. Aiming to provide workers with more information about their healthcare costs, the IRS originally mandated employers report the aggregate cost of employer-sponsored group health plan coverage on their employees' W-2 form, beginning in the 2011 tax year. However, the IRS later made reporting optional for 2011 employees. 

Who is affected

Currently, the W-2 reporting requirements only apply to businesses and government bodies that issue 250 or more W-2s. This means the new reporting standards are optional for employers with fewer than 250 issued W2s and will remain so until the IRS provides further guidance for the coming years. To view the ACA W-2 regulations, visit the IRS website.

Reporting requirements

Employers affected by the requirement must report information related to coverage under any group plan they offer that is excluded from the employee's gross income. It does not matter who actually pays for coverage.

Exclusions

Some types of coverage do not need to be reported under the W-2 requirement. These include:

• Coverage under a Health Reimbursement Arrangement (HRA).
• Coverage for Long-Term Care.
• Coverage under a dental or vision plan that is not integrated into a group health plan.
• Coverage under a self-insured plan that is not subject to COBRA
• Coverage under a multi-employer plan.
• Accident, disability income, liability insurance or workers compensation benefits.
• Most hospital indemnity or other fixed indemnity insurance.
• Coverage under an EAP, wellness program or on-site clinic if you do not charge COBRA beneficiaries a premium for these benefits.
  

For further information, please download our Legislative Brief: Form W-2 Reporting Requirements or view this video. 

To notify employees of the change, feel free distribute the Benefit Bulletin to all your employees.