Reporting the cost of group health insurance coverage to your employees

As part of the Patient Protection and Affordable Care Act of 2010, employers are required to report the cost of group health insurance coverage to their employees on an annual basis. The intent is to provide individuals more complete and useful information on the cost of their health care coverage. With the deadline for implementation approaching, provided below are a few commonly asked questions to ensure you are in compliance.

  • Who does the requirement apply to?
    All employers providing employer-sponsored health care coverage, including federal, state, and local governments that file more than 250 W-2 forms are required to report.
  • When is reporting required to begin?
    Reporting is required for calendar year 2012 W-2 forms, which will be issued in January 2013. Reporting for calendar year 2011 on the W-2 forms issued in January 2012 is optional.
  • Where is this information to be reported?
    The cost is reported on form W-2 in box 12 using code DD.
  • Does this change the computation of taxable income?
    No. This is informational reporting only.
  • Does this mean a W-2 needs to be issued to retirees?
    No. This does not expand the applicability of the form W-2.
  • Is the cost of dental and vision insurance included in the reportable cost?
    No. If dental or vision coverage is included in the group health insurance plan, then it is not segregated; however, if it is provided through a separate plan, it is not included in the reportable cost.
  • Does the reportable cost include both the employer and employee paid cost?
    Yes. The reported cost of coverage should include both the employer- and employee-paid portions of coverage regardless of if the employee payments are pre-tax or post-tax. The reported cost should not include any contributions to a health savings account (HSA) as defined under § 223(d) or any salary reduction contributions to a flexible spending arrangement (FSA) as defined under § 106(c) and § 125.ere.