Health Care Reform Reporting Updates

The IRS has clarified some additional health care reform reporting rules recently.  Health care cost information must be reported on 2012 W-2s which will be issued in 2013.  An exemption is given to smaller employers with fewer than 250 W-2s in 2011 until at least 2014and possibly longer. 

Employers “are allowed but not required to report contributions to health reimbursement arrangements in calculating health care costs.”  Similarly, “the cost of providing coverage through employee assistance programs, wellness programs or on-site medical clinics is not required to be reported if the employer does not charge premiums for the coverage to COBRA beneficiaries.”  The reporting requirement does not apply to Native American tribal governments.

Last year the IRS determined that “the cost of coverage that is taxable to employees, such as for a child older than 26, must be reported on the W-2.”  It also stated that “contributions employees make to flexible spending accounts are to be excluded from the health care cost figure.” Employers will not have to include dental and vision care coverage costs in the health care cost figure “if those plans are separate from group medical plans.”

If an employee works part of the year, terminates employment and elects COBRA coverage, “employers can choose to report only the cost of coverage while the employee was working or to report that cost plus the cost of COBRA health care continuation coverage.”  However, employers must apply consistently whichever reporting choice is made.

“Health care cost information does not have to be reported when distribution of a W-2 is not required,” as may happen for retired employees