By the end of June, the U.S. Supreme Court is expected to let us know whether some or all of the Affordable Care Act health care reform law will stand—or be struck down. The highly anticipated decision notwithstanding, it’s a good idea to get your W-2 reporting ducks in a row now.
Time is running out
The IRS has now issued two rounds of what it calls transition relief, which excuses certain employers and benefits from having to report the value of health benefits on Form W-2. Catch: The transition relief also imposes a deadline. The IRS must publish changes to the reporting exceptions at least six months before the start of the calendar year to which the changes would apply. Bottom line: Changes to the reporting rules for 2012 W-2s would have to be published by the end of June 2012.
Help for those who must report
If you filed at least 250 W-2s in 2011, you’ll be on the hook for reporting the aggregate cost of employees’ health benefits on their 2012 W-2s. To help you along, this month’s Page 8 chart lists the typical health benefits that are provided to employees and whether you must report them. The IRS has also clarified that even if a benefit isn’t reportable, you may voluntarily report it. Remember: Reporting on Form W-3 isn’t necessary.
Since it’s unlikely that there will be any changes, at least for 2012 W-2s, here’s the complete list of excluded employers, plans and benefits:
- Employers that filed fewer than 250 W-2s in 2011.
- Employers that provide early W-2s to terminating employees.
- Employers that aren’t required to provide W-2s (e.g., retirees receive health benefits but no other reportable compensation or taxes).
- The plan is self-insured and not subject to COBRA or is a multi-employer plan.
- Benefits are provided under , wellness programs or on-site medical clinics, if employers don’t charge premiums for COBRA coverage.
- Dental and vision benefits that are offered under a separate policy or that employees can decline.
- Specific disease or hospital/fixed indemnity plans that employees pay for with after-tax dollars and that are offered as independent, noncoordinated benefits.
- For discriminatory self-insured plans, the cost of the excess that’s included in highly compensated employees’ gross income.
- Payments or reimbursements of health insurance premiums that are taken into income by 2% S corporation shareholder-employees.