Q&A with Wayne Pettigrew
2012 W-2 forms must include
amounts for medical premiums
Q: Under the Affordable Care Act, employers are required to include the medical premium amount paid for an employer sponsored group medical plan on the employee's W-2 form for the 2012 tax year. Will employees be taxed on the value of these benefits?
A: No. The requirement to include these amounts is for informational purposes only and there is no provision in the ACA to tax these benefits as income. The IRS website states that “this reporting is for informational purposes only and will provide useful and comparable consumer information on the cost of health care coverage.”
Q: I understand there's some confusion among employers and carriers over the requirement.
A: Many initially thought that the requirement only applied to employer-paid premiums but the IRS website recently stated the employer and employee portion of any premium paid toward an employer-sponsored plan should be included. Therefore, even plans in which the employer does not contribute need to include the employee premiums paid.
Q: What premiums should be included?
A: The report should include all premiums paid for major medical, the health flexible spending account (FSA) value for the plan year in excess of employee's cafeteria plan salary reductions for all qualified benefits and hospital indemnity or specified illness (insured or self-funded), plans paid through salary reduction (pretax) or by employer. Dental, life disability and vision coverage premiums paid separately are not required to be included on the form.
Q: What happens if employers omit the information from their W2s. Are they fined?
A: There is transition relief for certain employers, types of coverage, and situations from the requirement to report the value of coverage on the 2012 forms W-2. This relief will apply to future calendar years until the IRS publishes additional guidance. However, any guidance that expands the reporting requirements will apply only to calendar years that start at least six months after the guidance is issued. For the 2012 year, employers filing fewer than 250 forms W-2 for the previous calendar year will not be required to report the cost of coverage on the 2012 forms W-2.
PAULA BURKES, BUSINESS WRITER