IRS Delays Employer Health Care Cost Reporting Requirement, Releases Draft Form

Internal_Revenue_Service_logo.pngIn order to give employers more time to make changes to their payroll systems and procedures to comply with a new health care cost reporting requirement, the IRS and Treasury Department have announced that this obligation is now optional for 2011. As discussed in IRS Notice 2010-69, (pdf) the Affordable Care Act includes a provision requiring employers to report the cost of health care coverage under an employer-sponsored group health plan on Form W-2. The IRS Notice explains that employers will not be required to do so for 2011, and will therefore not be penalized for failing to meet this obligation.

The IRS has, however, released a Draft Form W-2 (pdf) that employers can use to report their health care coverage costs if they choose to do so for 2011. The purpose of reporting the cost amount is for information only, and not subject to taxation. As explained in a press release, the draft form includes the codes that employers may use to report the cost of coverage under an employer-sponsored group health plan.

The IRS expects to issue guidance on this reporting requirement within the next three months.

This entry was written by Ilyse Schuman.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.