Affordable Care Act Requirements for Form W-2 Reporting
We're coming up on ACA season and getting in front of those deadlines for meeting compliance requirements is paramount. While this blog is focused on a high-level summary of requirements and associated calendar year deadlines, please be aware that deadlines for non-calendar year plans may differ from the information contained within. Over the next few months, we’ll be releasing important information regarding key dates, deadlines, and details pertaining to annual compliance. You’ll want to pay close attention to any updates to required forms, notices, and guidance provided by the IRS.
First up is the ACA requirement for employers to provide employees with Form W-2 reporting the aggregate cost of employer-sponsored health coverage with a deadline of January 31st. The general purpose of this requirement is for employers to provide employees with information on how much their health coverage costs, though there are exceptions; FSAs funded solely by salary-reduction amounts, and HSA contributions made by the employer and the employee, for example, are not required to be reported on Form W-2. Small employers (those who file fewer than 250 Forms W-2) are not currently required to comply with the Form W-2 reporting requirement. The reporting requirement does not mean that the coverage is taxable- the value of the employer’s contribution to health coverage is excludable from an employee’s income, therefore it is not taxable.
Applicable Large Employers (ALEs) who are subject to this requirement, including businesses, tax-exempt organizations, and federal, state, and local government entities (not including plans primarily for military members and their families), must include the portions paid by both the employer and the employee. Health care coverage for retirees or former employees who would not normally receive a W-2 from an employer are exempt from this requirement.
If these reporting requirements are revised in the future, any new requirement or changes to existing requirements would not be applicable until the tax year beginning at least six months after the date of issuance of the updated guidance. For more details on Form W-2 reporting of employer-sponsored health coverage, please visit the IRS website.
