Reporting Health Insurance Cost on W-2 using Code DD
Many employers are required to file the value of an employee’s fitness care blessings in Box 12 of Form Health Insurance Cost on W-2 Wage and Tax Statement, the usage of code “DD” to discover the amount. This amount is said for informational functions handiest and is NOT taxable. It is covered in Box 12 so as to offer similar customer records at the fee of fitness care insurance. In general, the quantity stated will include the element paid through the agency in addition to the element paid by the worker. It will not encompass the quantity of any income discount contributions.
Additional Information
The Patient Protection and Affordable Care Act introduced the requirement for employers to list on an employee’s W-2 the “aggregate fee” of applicable organization-sponsored coverage. The requirement became optionally available for 2011, so most employees will see this quantity pronounced for the first time in 2012. Reporting for certain small employers stays non-compulsory till 2013.
The Affordable Care Act requires employers to report the fee of insurance beneath an enterprise-subsidized group fitness plan. Reporting the cost of health care coverage on the Form W-2 does now not imply that the coverage is taxable. The fee of the agency’s excludable contribution to fitness insurance continues to be excludable from an employee’s earnings, and it isn’t taxable. This reporting is for informational purposes simplest and will offer personnel useful and comparable consumer records on the cost in their fitness care coverage.
Employers that offer “relevant organization-backed coverage” underneath a collection health plan are issue to the reporting requirement. This consists of groups, tax-exempt groups, and federal, state and nearby government entities (except with appreciate to plans maintained in most cases for participants of the navy and their families). However, federally diagnosed Indian tribal governments aren’t situation to this requirement.
Transition Relief
For certain employers, forms of coverage and situations, there is transition remedy from the requirement to report the cost of insurance starting with the 2012 Forms W-2. This transition comfort first implemented to the 2013 Forms W-2 that were issued in 2014. The comfort applies for the 2015 tax year and could keep to use to future calendar years till the IRS publishes additional steerage. (Note: employers typically are required to offer employees with the 2015 Forms W-2 in January 2016.) Any steerage that expands the reporting requirements will practice best to calendar years that begin at the least six months after the guidance is issued. See the “Optional Reporting” column inside the under chart for the employers, styles of insurance, and conditions eligible for the transition remedy.
Reporting at the Form W-2
Employers which are difficulty to this requirement must report the fee of the fitness care insurance in Box 12 of the Form W-2PDF, with Code DD to pick out the quantity. There is no reporting on the Form W-3 of the whole of those amounts for all of the organization’s employees.
In standard, the amount pronounced ought to include each the component paid with the aid of the employer and the component paid by means of the worker. See the chart, underneath, and the questions and solutions for greater facts.
An enterprise is not required to issue a Form W-2 entirely to file the value of the fitness care insurance for retirees or different personnel or former employees to whom the agency would now not in any other case offer a Form W-2.
The chart under illustrates the types of insurance that employers must record at the Form W-2. Certain gadgets are listed as “elective” based totally on transition alleviation provided with the aid of Notice 2012-9PDF (restating and clarifying Notice 2011-28PDF). Future guidance may revise reporting necessities however will no longer be relevant till the tax yr beginning as a minimum six months after the date of issuance of such steerage.
The chart evaluations the reporting necessities for Box 12, Code DD, and has no impact on necessities to report these gadgets some other place. For example, even as contributions to Health Savings Arrangements (HSA) are not to be mentioned in Box 12, Code DD, certain HSA contributions are suggested in Box 12, Code W (see General Instructions for Forms W-2 and W-3
Employers
The Affordable Care Act requires employers to document the price of insurance under an organisation-backed institution fitness plan on an employee’s Form W-2, Wage and Tax Statement, in Box 12, using Code DD.
Many employers are eligible for transition comfort for tax yr 2012 and beyond, until the IRS issues final guidance for this reporting requirement.
Individuals and Families
Individuals (employees) do not have to report the cost of insurance beneath an business enterprise-sponsored organization fitness plan that can be shown on their Form W-2, Wage and Tax Statement, in Box 12, the use of Code DD.
The quantity stated does not have an effect on tax liability, as the cost of the employer contribution is still excludible from an employee’s earnings and isn’t taxable. This reporting is for informational purposes best, to show employees the fee of their fitness care benefits.
