SECOND OPINIONS: PPACA Form W-2 Reporting Requirement

The IRS recently issued additional interim guidance (Notice 20129, the "Notice") on reporting the cost of employer-provided health care coverage on Form W2 (new Code "DD" reporting).

The Notice also modifies certain transition guidance issued last year under Notice 201128 (and republishes the Q&As in Notice 201128 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 onsite 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 onsite 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 W2 to employees are not required to report the aggregate reportable cost of employersponsored group health plan coverage.


  • The Notice provides that an employer may include on Form W2 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 onsite medical clinic.


  • For benefit programs that provide benefits that constitute applicable employersponsored coverage in conjunction with benefits that do not constitute applicable employer sponsored coverage (e.g., certain longterm disability programs), an employer may use any reasonable allocation method to determine the cost of the portion of the program providing applicable employersponsored 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. 

What key modifications does Notice 2012-9 (see IRS Issues Guidance on Reporting Cost of Health Plan Coverage) make to the transition relief provided in Notice 201128? 


The Notice clarifies several Q&As in Notice 201128, including the following: 


  • The Notice clarifies that the cost of coverage under a dental plan or vision plan is not included in the aggregate reportable cost if the plan satisfies the requirements for being excepted benefits under HIPAA. Generally, to be excepted benefits under HIPPA, the dental or vision benefits must (i) be offered under a separate policy, certificate or insurance contract, or (ii) permit participants not to elect the dental or vision benefits and if they do elect them, they must pay an additional premium or contribution for that coverage. 


  • The Notice clarifies that the amount of a health FSA is not required to be included in the aggregate reportable cost if the amount of the health FSA is funded only through employee salary reduction contributions. 


  • The Notice expands and clarifies the employers that are exempt from the employer-sponsored health care reporting requirements.  Most notably, it provides that employers that are required to file fewer than 250 Forms W2 for the preceding plan year are exempt from the reporting requirement for 2012 Forms W2.  These employers are also exempt from reporting for later years until further guidance is issued. 


The Notice also provides clarifying guidance with respect to employees who work for multiple employers.

Is the guidance considered transition guidance that could be modified in future IRS regulations? 


Yes, Notice 2012-9 states that it provides "interim guidance" or "transition relief" that is applicable until further guidance is issued.  As with Notice 201128, the Notice provides that any future guidance will be prospective only and will not be applicable earlier than January 1 of the calendar year beginning at least 6 months after the guidance is issued.   



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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.