Posted on 01/24/2012 3:27:54 PM PST by mdittmar
Under the Patient Protection and Affordable Care Act, in 2013 employers must begin reporting “aggregate costs” they pay for employee health coverage on the individual W-2 Forms of those employees. For your reference, five takeaways from the recently published Internal Revenue Service guidance on the reporting requirement:
On Aggregate Costs…
“‘Aggregate cost’ is the total cost of coverage under all applicable employer-sponsored coverages [and] is determined according to the general rules used to determine the applicable premium for COBRA continuation coverage. It includes amounts paid by the employer and the employee, regardless of whether these amounts are paid through pre-tax or post-tax contributions.” (Updated Guidance on Form W-2 Reporting of Healthcare Coverage by Morgan Lewis)
On Filing Exemptions…
“Employers that are tribally chartered corporations, which are wholly owned by a Native American tribal government that is recognized by the federal government, need not comply with the reporting requirement until further guidance is issued. Also exempt from the new reporting requirement, pending further guidance, are employers that file fewer than 250 Forms W-2 for the preceding calendar year.” (IRS Clarifies Form W-2 Reporting Obligations for Employer-Provided Health Coverage by Davis Wright Tremaine LLP)
On Wellness Programs…
“The reported amount is required to include the cost of coverage provided under an employee assistance program (EAP) or wellness program, or by an on-site medical clinic, only to the extent that the coverage is provided under a program that is a ‘group health plan.’” (Legal Alert: IRS Issues Interim Guidance on Health Plan Cost Reporting Requirement by Ford & Harrison LLP)
On Flexible Spending Arrangements…
“The cost of coverage provided under a health FSA does not need to be reported so long as the amount of the employee’s salary reduction under the cafeteria plan (for all tax-qualified benefits) exceeds the amount set aside for the health FSA for the plan year (including salary deferrals plus employer flex credits the employee allocates to the health FSA, or an employer match based on the employee deferral.)” (IRS Updates Guidance on W-2 Reporting of Health Care Costs by Christine Roberts)
On Dental and Vision Coverage…
The guidance “provides that the standard for determining whether the cost of dental or vision coverage is reportable, is the same standard that is used for determining whether coverage is subject to the Health Insurance Portability and Accountability Act of 1996 portability rules.” (IRS Releases Revised Health Care Reporting Guidance by Reed Smith)
Does this mean my employer provided health care coverage will reported as income?
Not yet.......but remember all that talk about taxing Cadillac Plans?
I don’t think so. But it’s a beginning to that end, I believe. They probably want to know how much money is being spent on this non-monetary benefit so that they can anticipate how much they WILL collect once they start taxing it. I wouldn’t be surprised if nobama makes this one of his “edicts.”
“Does this mean my employer provided health care coverage will reported as income?”
IF your employer has over 250 W-2’s and isn’t a tribal corporation, then Yes, it will be reported as income.
We had to pass the bill to find out what’s in it.
Employer sponsored health insurance was always an anomaly, the anomaly ends now, with or without the repeal of ObamaCare.
Isn’t the W-2 only used by the IRS for determining income?
Social Security Administration probably uses it, too. I don’t know what the limitations of its use are. Probably lots of agencies take data from them.
They probably want to make sure reporting is in place before they actually start taxing. Employers will figure out a way of getting around it. Like employees paying their own premiums and the employer increase their income by the same amount. Mine does it now for short and long-term disability. If we pay for it, then when we receive the benefits, they (the benefits) are not taxable. But this is something our employer wants to pay for, so every quarter or so, we get reimbursed through out earnings for the premiums we pay. My guess, anyway.
http://www.kiplinger.com/columns/ask/archive/a-tax-on-health-benefits.html
So my employee provided healthcare will no longer be a benefit,it will be income?,guess I’ll take that free government obamacare;)
Correct. If you health plan is considered to be giving you extra benefits you do not deserve, the excess will be taxed.
That was part of the Healthcare Reform Act.
Only the portion that is in excess of what the federal gov't thinks you should have. If your plan is cheaper than the most basic benefit (as determined by the Secretary of HHS), you will not be taxed. If your plan is more expensive than the most basic benefit, that excess will be taxed as income.
I believe the One and Dem’s gave waivers to the Unions as well...you know the ones with the big cadillac plans.
Not yet.......but remember all that talk about taxing Cadillac Plans?
Yup. Do you remember the dust up under Clinton about "imputed income", as it concerned your mortgage?
Imputed Income. This is the precursor to you being taxed on your health care benefits. It’s a setup for what is coming in 2013/2014 if Obama is re-elected. Your benefits will eventually be taxed under Obamacare.
I'm 66 years old and retired, my former employer and secondary insurer, reimburses me for medicare premiums I pay, in two checks annually. When my wife starts on Medicare, they will reimburse her too.
They have also sent me a W-2 for many years showing how much they have paid for my “legal insurance” and I have to declare that as income for tax purposes. Legal ins covers wills, adoptions, simple uncontested divorces and some cases where I might be the defendant in criminal or civil matters.
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