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.
On January 3, 2012, the IRS issued Notice 2012-9, which restates and amends prior interim guidance on the new requirement under the Patient Protection and Affordable Care Act (PPACA) that employers provide informational reporting to employees of the cost of their employer-sponsored group health plan coverage on Form W-2.
Notice 2012-9 supersedes the guidance initially provided in Notice 2011-28, issued in March 2011. The new notice modifies the prior guidance and provides some additional new guidance. Some of the more noteworthy modifications and additions follow below:
- The Notice clarifies that the reporting requirement does not apply to coverage under a health FSA if contributions occur only through employee salary reduction elections (Q&A-19).
- The Notice provides clarification that an employer is not required to report the cost of coverage under a dental or vision plan if the benefits meet the requirements for being considered excepted benefits under HIPAA (Q&A-20).
- New guidance provides that employers are not required to report the cost of coverage under an EAP, wellness program, or on-site medical clinic if the employer does not charge a premium with respect to that type of coverage when provided under COBRA to a qualifying beneficiary (Q&A-32).
- The aggregate reportable cost for a calendar year reported on Form W-2 may be based on the information available to the employer as of December 31 of the calendar year. This means that the employer does not need to adjust for any elections or notifications received in a subsequent year that may have an effect on the cost of coverage in the prior year, such as notice of a divorce in the prior year (Q&A-35).
- The Notice also clarifies the application of the exception for certain “independent, noncoordinated benefits,” such as hospital indemnity or fixed indemnity insurance, that are offered to employees on an after-tax basis (Q&A-37 and Q&A-38).
The Treasury and IRS continue to work to develop regulations addressing the new reporting requirements, and the interim guidance provided in Notice 2012-09 applies until further guidance is issued.
For more information on the W-2 reporting requirement and related guidance see Littler’s ASAP, IRS Issues Guidance on Form W-2 Reporting for Costs of Employer-Provided Coverage, by Steven J. Friedman and Sean D. Brown and the November 15, 2011 blog entry.