How Should Employers Handle the New W-2 Reporting Requirements?

June 22, 2010 ( – Section 9002 of the Patient Protection and Affordable Care Act ("PPACA") requires employers to disclose the aggregate cost of "applicable employer-sponsored coverage" on each employee's Form W-2. 

This week’s column focuses on some commonly asked questions about the new reporting requirements.

When does the new requirement take effect?

The new Form W-2 requirement is effective for taxable years beginning after 2010.  This means that the first Form W-2 including information on the aggregate cost of employer-sponsored health coverage will be the 2011 Form W-2 due in January 2012.

What is “applicable employer-sponsored coverage” for purposes of this requirement?

Applicable employer-sponsored coverage is defined generally to include major medical coverage, amounts under Health Reimbursement Accounts (HRAs), Medicare supplemental coverage, employer-provided Medicare Advantage plans, the value of on-site medical clinics, and so-called “mini-medical” (or limited benefit) plans.  The Form W-2 also includes any amounts contributed by the employer to a health savings account (HSA) or Archer medical savings account (MSA) of the employee (or the employee’s spouse) under a pre-PPACA requirement.

Are there certain types of employer-provided coverage that are excluded?

Yes, certain types of employer-provided coverage are specifically excluded from new Form W-2 reporting requirement, including:  the amount of any salary reduction contributions to a health flexible spending arrangement (health FSA); stand-alone vision or dental insurance coverage; long-term care coverage; hospital indemnity or other fixed indemnity insurance (if paid for with employee after-tax dollars); coverage only for a specific disease or illness (if paid for with employee after-tax dollars); coverage only for accident, or disability income insurance, or any combination thereof; and workers’ compensation insurance.

How does an employer determine the aggregate cost of coverage?

The provision requires the employer to determine the value of employer-sponsored coverage under rules similar to the rules that apply for purposes of determining COBRA continuation coverage premiums, including the special rules that apply for self-insured arrangements.  


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You can find a handy list of Key Provisions of the Patient Protection and Affordable Care Act and their effective dates at  



Christy Tinnes is a Principal in the Health & Welfare Group of Groom Law Group in Washington, D.C.  She is involved in all aspects of health and welfare plans, including ERISA, HIPAA portability, HIPAA privacy, COBRA, and Medicare.  She represents employers designing health plans as well as insurers designing new products.  Most recently, she has been extensively involved in the insurance market reform and employer mandate provisions of the health-care reform legislation.

Brigen Winters is a Principal at Groom Law Group, Chartered, where he co-chairs the firm’s Policy and Legislation group. He counsels plan sponsors, insurers, and other financial institutions regarding health and welfare, executive compensation, and tax-qualified arrangements, and advises clients on legislative and regulatory matters, with a particular focus on the recently enacted health-reform legislation.

PLEASE NOTE:  This feature is intended to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.