W-2s and the Affordable Care Act

On March 29, 2011, the IRS issued guidance regarding the W-2 provision of the Affordable Care Act for employers filing fewer than 250 Forms W-2 in the previous tax year.  Read below for more information.

Published by John L Sobraske on 03/30/2011 04:35 PM EDT

On March 29, 2011, the Internal Revenue Service (IRS) issued interim guidance regarding the W-2 provision of the Affordable Care Act. This provision requires employers to report the aggregate cost of employer-sponsored health coverage on employee Forms W-2. Prior guidance stated this reporting requirement to be optional for all employers for 2011 Forms W-2 (to be provided to employees in January 2012).

With this change, the requirement is now optional for employers filing fewer than 250 Forms W-2 in the previous tax year. This is effective for 2012 Forms W-2 (issued in January 2013) and until further guidance is issued. Employers filing 250 or more Forms W-2 in 2011 must include the cost of employer-sponsored health coverage on the forms for the tax year 2012.

The IRS reiterated that the health care amounts reported on Forms W-2 are strictly informational and not taxable to the employee. In addition, Forms W-2 do not need to be issued to individuals who would not otherwise receive a Form W-2, such as COBRA recipients and retirees.