I’m still a bit confused about the W-2 reporting. Who is required to report and what if I’m a small employer? Also, what exactly has to be reported? This reporting requirement is coming up fast, will you please help me understand this better so I can be prepared?
— Confused in Cochise County, Ariz.
Dear Confused in Cochise,
Thank you for your very timely and important question. Beginning this month (January 2013) the Patient Protection and Affordable Care Act (or ACA) requires that employers of a certain size begin reporting the cost of coverage provided to employees through employer sponsored health benefit plans on employees’ W-2 forms.
Who is required to report?
Employers who filed 250 or more W-2s in 2011 are subject to reporting requirement
What about smaller employers?
There is a safe harbor for employers who filed fewer than 250 W-2 forms in 2011. Smaller employers are not yet required to comply with the W-2 cost of coverage reporting requirements.
What is reported?
The IRS has provided an exhaustive list at http://tinyurl.com/DearJonJanuary but, in general, what’s reported is the cost of coverage for major medical coverage provided by the employer and any contributions that an employer makes to an employee’s flexible spending account (or FSA). Please note that employee contributions to FSAs are not reported.
What amounts are reported, the amount the employer pays or the amount the employee pays?
Both. The amount reported should include the portion paid by the employer and the portion paid by employee for major medical coverage. That is, both the employer’s and the employee’s premium or contribution must be reported. Please note that employee contributions to FSAs are not included but employer contributions are.
(Editor’s Note: Dear Jon is a new WG&S series devoted to answering all your health-care related questions. As we continue to move into uncertain waters, Western Growers Compliance Counsel Jonathan D. Alexander is here to help. Specializing in Health Care Reform, all things PPACA and more, Jon will answer your questions however small or big they seem. To submit your question, write firstname.lastname@example.org.)
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