Reporting Cost of Employer-Provided Health Care Optional

The IRS has issued an interim guidance to employers on informational reporting on each employee’s annual W-2 of the cost of health insurance coverage they sponsor for employees.IRS emphasizes that this reporting is optional, to inform them of the cost of their health coverage.Employer-provided health coverage continues to be excludable from an employee’s income, not taxable.

In the Affordable Care Act, it was required butNotice 2010-69made it optional for all employers to report on employees W-2 that will be issued in January 2012.The IRS provided further relief for smaller employers by making this requirement optional for them at least for 2012 and continuing this optional treatment for smaller employers until further guidance is issued.

Notice 2011-28provides guidance for employers that are subject to this requirement for the 2012 Forms W-2 and those that choose to voluntarily comply with it for either 2011 or 2012.This notice also includes information on how to report, what coverage to include and how to determine the cost of coverage.

The 2011Form W-2, prior IRSNotice 2010-69deferring the reporting requirement for 2011, andNotice 2011-28containing the new guidance are available onirs.gov.