Market News
Forms W-2 Reporting Requirement Update
January 10, 2012
On January 3, 2012, the IRS released Notice 2012-09, which amends and restates interim guidance produced in Notice 2011-28 that was issued last year. The 2011 Notice was a FAQ; this new Notice adds eight more questions along with revising some of the answers produced in the earlier FAQ Notice. The new interim guidance also emphasizes that the W-2 reporting requirement is for IRS information only. This new requirement doesn't cause current excludable employer-sponsored health care coverage to become taxable.
Employers who file fewer than 250 Forms W-2 in 2011 are not required to report the value of "applicable employer-sponsored coverage" for the 2012 calendar year. Employers who file 250 or more Forms W-2 for 2011 are required to report the value of coverage for calendar year 2012. The new IRS release is coming late for many of these larger employers who are obligated to report the value of group health plan coverage for 2012. Regardless, the new FAQs and guidance are still welcomed clarification for many of our clients who have been struggling with this new W-2 requirement.
For some plan sponsors, the new IRS guidance creates concerns, particularly if the employer permits employees to purchase critical illness or specific illness type plans with pre-tax dollars. These plans, regardless of whether they are considered voluntary and “independent and non-coordinated” with the health plan, must be reported if the employer makes any contribution to the cost that is excludable from the employee’s gross income or if the employee uses pre-tax money to purchase the policy through a Code Section 125 cafeteria plan.
Reference: "IRS Notice 2012-09" (Jan 3, 2012)
