Healthcare Reform and W-2 Reporting

Joe Popp | June 6th, 2012

Healthcare Reform’s Impact on Employers

The Affordable Care Act (Healthcare Reform) put into law a number of provisions which impact employers. These provisions are being rolled out slowly over the next few years. One provision that’s new for 2012, regarding W-2 reporting of health insurance costs, applies only to large employers. As this provision is likely to get a lot of attention in 2012, it’s important to know, up front, if your business is required to comply.

Does Your Business Need to Report Heath Insurance Costs?

How to do you know if you need to comply with this new provision? It’s as simple as knowing your number of employees. Private, public and non-profit employers with more than 250 employees (those who issue more than 250 Form W-2s) must now disclose/report the cost of employer provided health insurance benefits on the annual W-2 statement provided to each employee.

Have less than 250 employees? You don’t need to worry about this provision – for now. Smaller employers do not yet need to comply and are exempt from this W-2 reporting requirement.

Why Report Health Insurance on W-2s?

Although healthcare benefits will now be listed on (some) employees’ W-2s, which are generally used to report earned income, healthcare benefits will remain tax-free. It is the hope that including healthcare benefits on W-2s will help employees to understand the true value of their benefits package and their total compensation. The IRS will use this information in the future to ensure compliance with the Affordable Care Act’s “pay or play” provision – either provide access to satisfactory healthcare to your employees or pay a penalty.

The IRS put out a handy chart to show you what kinds of things you might need to start reporting in the future, even if you are exempt from reporting this information this year it’s worth a quick look. Its available on the IRS’s website. Contact our Ohio Tax Professionals

Not sure whether you need to report your employees’ health benefits on their W-2s (or know that you do, but don’t know how to do so)? Contact Rea & Associates. Our Ohio tax team will figure out if and what you need to report. Worried about compliance with future Healthcare Reform provisions? Our Ohio tax professionals will determine what provisions will impact you and what you need to do to stay out of hot water.

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