On March 29, the Internal Revenue Service issued interim guidance on informational W-2 reporting of the employer cost of group health insurance to employees. The IRS is also requesting comments on this interim guidance. The IRS has emphasized that this new reporting to employees is for their information only, to inform them of the cost of their health coverage, and does not cause excludable employer-provided health coverage to become taxable.
Although initially required by the Affordable Care Act, Notice 2010-69 was issued last fall making the requirement of reporting the cost optional for all employers for the 2011 tax year. In this new guidance, the IRS states that for smaller employers (those filing fewer than 250 W-2 forms) this requirement is optional at least for 2012 (W-2 forms furnished to employees in January 2013).
Notice 2011-28 also provides 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. It includes information on how to report, what coverage to include and how to determine the cost of the coverage. More information, including FAQs, is available at www.IRS.gov