New IRS Reporting Requirement for Payroll Departments
|November 13, 2012||Posted by Steve Webster under Payroll|
The Affordable Care Act, also known as ObamaCare, requires employers to report to their employees the cost to cover their employees in the employer-provided group health plan. The cost is reported in box 12 of the employees W-2 form.
Here are the key points:
1. It is important to note that the W-2 reporting is only for employee information to let them know the cost of their health care coverage. It does not mean or cause employer-provided healthcare coverage to become taxable.
2. Your company is not subject to the reporting requirement for 2012 if you filed fewer than 250 W-2 Forms for the preceding calendar year however, reporting may be made on a voluntary basis. The IRS calls this transitional relief which makes me think that it most likely will be required by all employers in the future.
3. If your company does not provide coverage to your employees, you will have nothing to report.
4. Including the cost of your dental and vision plan is optional. Also optional is long-term care insurance, disability insurance and workers’ comp insurance.
This reporting requirement will add an extra burden to accounting departments and payroll departments for most companies. Many times health insurance costs are back dated on the invoice due to changes in the coverage dates and it can be difficult to get an exact annual cost. I don’t disagree that it is good information for the employees, but it will increase a company’s accounting and payroll cost. Based on the 2012 election results, this reporting requirement is probably not going to go away
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