The IRS recently issued additional interim guidance (Notice 2012‐9, the "Notice") on reporting the cost of employer-provided health care coverage on Form W‐2 (new Code "DD" reporting).
The Notice also modifies certain transition guidance issued last year under Notice 2011‐28 (and republishes the Q&As in Notice 2011‐28 that were not changed). Below we discuss several questions we have received on the Form W-2 reporting requirements.
What key new transition relief is provided in Notice 2012-9?
- The Notice provides key transition relief with respect to reporting the cost of coverage under an employee assistance program (EAP), wellness program or on‐site medical clinic for certain employers. Very generally, the Notice provides that if an employer does not charge a premium with respect to an EAP, wellness program or on‐site medical clinic to qualifying beneficiaries receiving COBRA, then such coverage is not required to be included in the aggregate reportable cost for any employee.
- The Notice provides reporting relief under which third party sick pay providers who furnish Forms W‐2 to employees are not required to report the aggregate reportable cost of employer‐sponsored group health plan coverage.
- The Notice provides that an employer may include on Form W‐2 the cost of applicable employer-sponsored coverage that is not required to be included in the aggregate reportable cost under applicable interim relief, including coverage under a Health Reimbursement Arrangement (HRA), multiemployer plan, EAP, wellness program, or on‐site medical clinic.
- For benefit programs that provide benefits that constitute applicable employer‐sponsored coverage in conjunction with benefits that do not constitute applicable employer sponsored coverage (e.g., certain long‐term disability programs), an employer may use any reasonable allocation method to determine the cost of the portion of the program providing applicable employer‐sponsored coverage. (The Notice also includes certain de minimis rules.)
- The Notice also provides certain transitional relief and guidance for coverage provided under hospital indemnity or other fixed indemnity insurance.