IRS Announces Healthcare Coverage Reporting on W-2 Optional for 2011

Health care reform law added a requirement that the aggregate cost of employer-sponsored health coverage be reported on an employee's Form W-2 beginning with the 2011 tax year. However, the IRS has announced that reporting of this coverage will not be required on any Form W-2 issued for 2011 (i.e., for coverage received in 2011), in order to give employers additional time to make the changes to their payroll systems and procedures that are needed to comply with the new requirement.

Release: http://www.irs.gov/pub/irs-news/ir-10-103.pdf

Draft Version new W-2: http://www.irs.gov/pub/irs-utl/draft_w-2.pdf

Employers have been waiting for guidance on the Form W-2 reporting requirement, and the one-year delay is a relief. But we hope the guidance slated for later this year addresses some of the many open issues regarding the new requirement, not the least of which is how to determine the cost of coverage. (Rules similar to the COBRA rules are to be used, but additional guidance is needed as to what that means for self-insured plans and determining the cost of HRA coverage is particularly unclear.) There are also questions about how to handle reporting for retirees, non-calendar-year plans, and retroactive enrollment changes.

back  |  printer-friendly version