UHY LLP Reports: Affordable Care Act Requirement for W-2s - What Employers Should Know

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As employers begin issuing W-2s to employees, it is important to note and understand certain developments that have taken place in recent years.

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As employers begin issuing W-2s to employees, it is important to note and understand certain developments that have taken place in recent years. Since 2012, the Affordable Care Act has required some employers to report the cost of coverage under employer-sponsored group health plans.

Currently, the inclusion of health insurance premiums on employee W-2s is not taxable, but rather serves to provide employees useful and comparable consumer information on the cost of their health care coverage.

Transition relief has been available to certain employers since the introduction of the reporting requirements. Employers filing fewer than 250 Forms W-2 for the previous calendar year have not been required to report the cost of coverage (though optional reporting is allowed). This transition relief has been rolled forward and applies to the 2015 tax year and will continue to apply to future calendar years until the IRS publishes additional guidance. Employers who are filing 250 or more Forms W-2 are subject to the reporting requirements per the healthcare legislation.

Employers that are subject to this requirement should report the value of the health care coverage in Box 12 of the Form W-2, with Code DD to identify the amount. In general, the amount reported should include both the portions paid by the both the employer and employee. Additionally, an employer is not required to issue a Form W-2 solely to report the value of the health care coverage for retirees or other employees or former employees to whom the employer would not otherwise provide a Form W-2.

For more information regarding the Affordable Care Act and general payroll taxation, please contact your professional at UHY LLP in Detroit 313 964 1040, Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040, or visit us on the web at http://www.uhy-us.com.

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Chris Clark
UHY LLP
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