Reporting the Cost of Health Care Coverage to Employees
Internal Revenue Service Notice 2011-28 provides interim guidance regarding the requirement to report to employees, on their annual Form W-2, the cost of their employer-sponsored group health plan coverage. This reporting requirement is required under Section 6051 (a)(14) of the Internal Revenue Code, which was added to the Code by the Patient Protection and Affordable Care Act of 2010.
This Compliance Update is limited to coverage of the guidance as it applies to health reimbursement arrangements (HRAs) and flexible spending accounts (FSAs). However, the Notice also provides guidance on many other topics, such as which types of coverage must be included in the reported amounts, how to calculate cost of this coverage, and the method for reporting cost of coverage.
This reporting requirement was establshd to provide useful information to consumers regarding the cost of their health care coverage. This requirement does not cause otherwise excludable employer-provided health care coverage to become taxable.
The reporting requirement generally applies beginning with 2012 Forms W-2 (i.e., forms for calendar year 2012 that are provided to employees in January 2013). However, certain employers, including small employers that are required to file fewer than 250 Forms W-2 for calendar year 2011, are elgible for transition relief that delays the effective date of these requirements.