The Internal Revenue Service (“IRS”) has  amended its guidance to employers on how to report the cost of group health coverage. Notice 2012-9 addresses, among other things, cost determinations for employee assistance programs, wellness programs, and health reimbursement arrangements. 

Internal Revenue Code section 6051(a)(14), enacted as part of the Patient Protection and Affordable Care Act of 2010, requires employers to report each year the aggregate cost of employer-sponsored group health coverage on Form W-2 (excluding amounts contributed to Archer Medical Savings Accounts and health savings accounts, and employee salary reduction contributions to health flexible savings arrangements). Although effective for the 2011 tax year, the IRS delayed enforcement of the section until 2012. Thus, beginning with the cost for 2012, employers must report the cost of health care coverage for each employee on the employee’s W-2, and the Form W-2s must be issued no later than January 31, 2013. 

The new Notice also clarifies, among other things, that:

  • small businesses filing fewer than 250 W-2s are not subject to the health care cost reporting requirement for 2012 (at least);
  • the acceptable methods for determining the cost of coverage for an employee who terminates employment during the year;
  • the reportable cost includes both pre-tax and after-tax employee contribution amounts for reportable coverage;
  • the standard for determining whether a dental or vision plan is subject to the reporting requirement is the same as the standard for determining whether that dental or vision plan is subject to the Health Insurance Portability and Accountability Act regulations. 

Generally, the reportable cost is determined by using the same method used to determine the applicable premium for COBRA purposes (actuarially determined for self-funded plans or simply the insurance premium for insured plans). However, employers with self-funded plans in particular have some flexibility in this regard.

IRS continues to accept and consider comments submitted in response to its earlier guidance on the reporting requirement in Notice 2011-28. Jackson Lewis attorneys are available to assist employers and other interested parties to submit comments to help shape the regulatory guidance regarding health care cost reporting.

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Photo of Monique Warren Monique Warren

Monique Warren is a Principal in the White Plains, New York office of Jackson Lewis P.C. Ms. Warren is a member of the Employee Benefits Counseling, Executive Compensation, Benefits Litigation and Workplace Privacy Practice Group.

Ms. Warren counsels employers on employee benefits compliance…

Monique Warren is a Principal in the White Plains, New York office of Jackson Lewis P.C. Ms. Warren is a member of the Employee Benefits Counseling, Executive Compensation, Benefits Litigation and Workplace Privacy Practice Group.

Ms. Warren counsels employers on employee benefits compliance and administrative matters, drafts plan documents and employee communication materials, and represents employers to government agencies and in employee benefit litigation. Her expertise includes health and welfare plans as well as retirement plans.

Ms. Warren has spoken at numerous client and professional association events including SHRM and WEB meetings. She also has presented numerous seminars on employee benefits compliance topics including benefits basics for human resource professionals, HIPAA privacy and security, 409A requirements, and annual legal updates.

Prior to joining the firm in 2006, Ms. Warren was a member of the employee benefits group of a large Chicago law firm and later maintained her own practice in Illinois, representing employers in employee benefits, employment and employment-related immigration matters. While attending law school, she was an intern in the tax clinic at Loyola University Chicago School of Law and was a judicial extern for the Honorable Blanche Manning, Federal District Court, Northern District of Illinois. As a law student, she received academic honors and was a member of the moot court employment law team.

During the ten years prior to attending law school, Ms. Warren directed human resource functions in manufacturing and research enterprises. She was certified as a Senior Human Resource Professional by SHRM in 1996.