W-2 Reporting Relief for Small Employers

If your company issues fewer than 250 W-2 Forms for 2011, then you are relieved from tracking and reporting the value of group health care coverage on W-2 Forms in 2012. On March 29, the IRS released Notice 2011-28, making the requirement to report the cost of coverage under an employer-sponsored group health plan under the Affordable Care Act optional for smaller employers in calendar year 2012.

Under the Affordable Care Act, all employers that provide applicable employer-sponsored coverage during a calendar year are subject to the reporting requirement. Applicable employer-sponsored coverage is coverage under any group health plan (including a self-insured plan) that is excludable from the employee’s gross income under Code Section 106, with certain exceptions. The Act would have required reporting for 2011, but now reporting will not be mandatory for most employers until 2012, with the W-2 Forms issued in January 2013.

Despite the temporary relief, employers may want to decide now whether to report the value of health coverage per pay period or at the end of the year.