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Changes in W-2 Reporting

The Patient Protection and Affordable Care Act (PPACA) will require companies to report the cost of employer-sponsored health coverage on the IRS Form W-2. As originally written, the law would have required employers to begin disclosing this number in 2011. However, an amendment to the law has changed this requirement. Notice 2010-69 of the PPACA states, “This notice provides interim relief to employers with respect to reporting the cost of coverage under an employer-sponsored group health plan on Form W-2, Wage and Tax Statement, pursuant to § 6051(a)(14) of the Code. Specifically, this notice provides that reporting the cost of such coverage will not be mandatory for Forms W-2 issued for 2011…. Accordingly, an employer will not be treated as failing to meet the requirements of § 6051 for 2011, and will not be subject to any penalties for failure to meet such requirements, merely because it does not report the aggregate cost of employer-sponsored coverage (as defined in § 4980I(d)(1)) on Forms W-2 issued for 2011.”

The new reporting requirement is designed to make the cost of employer-sponsored health coverage more transparent to employees. “The IRS continues to stress that the amounts reportable are not taxable,” the tax agency said in the announcement. “The new reporting requirement is intended to be informational only, and to provide employees with greater transparency into overall health care costs.”

A draft of the W-2 form for 2011 can be found here, and includes the codes that employers may use to report their health-care coverage costs. 

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