January 2013 > Be a Wise Healthcare Consumer
Be a Wise Healthcare Consumer
New Reporting Requirement for W-2s Issued after January 1, 2013
This year, as a part of the Affordable Care Act (ACA), employers are required to report the total calendar year cost of your employer-sponsored health insurance benefits on an employee’s Form W-2. This reporting is for informational purposes only. The value of your employer-sponsored health insurance benefits is not considered taxable income. W-2s issued after January 1, 2013 are required to include this reporting.
Where will the total value of my employer-sponsored health insurance benefits be listed on my W-2?
The guidance requires that employers report the new information on W-2 forms in Box 12, using code DD.
What does the value of the number of Box 12 represent?
The value listed in Box 12 is derived from the calendar year cost of your employer-sponsored Basic UT SELECT Medical plan minus:
- the cost of $20,000 Basic Life insurance;
- the cost of $20,000 Basic Accidental Death and Dismemberment insurance; and
- the UT System contribution to each UT institution’s Employee Assistance Program.
Does reporting the cost of coverage on a W-2 have any impact on whether the coverage is taxable?
No. This reporting is informational only and does not mean that employer-provided coverage is taxable.
Does the cost of coverage include both the portion of the cost paid by the employer and the portion of the cost paid by the employee?
Yes. The cost of coverage includes both the portion of the cost paid by the employer and the portion of the cost paid by the employee.
What is not included in the total cost of coverage?
According to IRS Notice 2012-9, applicable employer-sponsored coverage does not include:
- Coverage for excepted benefits under the Health Insurance Portability and Accountability Act (HIPAA), such as:
- long-term care insurance,
- voluntary accident insurance,
- disability income,
- liability and supplemental liability insurance, and
- workers' compensation insurance;
- Salary reduction contributions to a health flexible spending account (FSA);
- Coverage under a "stand-alone" dental or vision plan if the plan satisfies the requirements for being excepted benefits for purposes of HIPAA; or
- Coverage for employee assistance program (EAP), wellness program, or on-site medical clinic, if that employer does not charge a premium for this type of coverage under COBRA.
For more information, the IRS created a YouTube video to explain the requirement for reporting health insurance coverage on W-2s. If you have additional questions regarding this reporting requirement, please contact your institution’s Payroll office.