IRS Issues W-2 Health Cost Reporting Guidance

March 29, 2011 ( – The Internal Revenue Service has issued interim employer guidance about reporting on employees’ W-2 the cost of the health insurance coverage they sponsor for employees.

The IRS is also requesting comments on this interim guidance. The IRS 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 a taxable event.

The tax agency said except as provided in a question-and-answer section of the IRS document, all employers that provide applicable employer-sponsored coverage during a calendar year are subject to the reporting requirement under § 6051(a)(14).

The Affordable Care Act provides that employers are required to report the cost of employer-provided health care coverage on the Form W-2. Guidance issued last fall made this requirement optional for all employers for the 2011 Forms W-2 (generally furnished to employees in January 2012), the IRS said. In the latest guidance, the IRS provided further relief for smaller employers (those filing fewer than 250 W-2 forms) by making this requirement optional for them at least for 2012 (i.e., for 2012 Forms W-2 that generally would be furnished to employees in January 2013).

The notice 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. The notice includes information on how to report, what coverage to include and how to determine the cost of the coverage.

The IRS notice is at