Beginning for Form W-2s due to employees by January 31, 2013 (for tax year 2012), many employers now must report the cost of employer-provided health insurance to employees. The health care costs should be reported in section 12 of the Form W-2, using code “DD.” The reporting is intended for informational purposes only since employer-provided health care currently is not taxable. The information is required however so that the IRS can verify that individuals have health care coverage as required beginning in 2014 under the Affordable Care Act and to make it easier for the IRS to impose the 40% “Cadillac tax” that takes effect in 2018.
For certain employers, however, the IRS has delayed the health care costs reporting requirement for an indefinite period. Accordingly, these affected employers will not have to report the costs for future calendar years until the IRS publishes additional guidance. The transition relief applies principally to employers filing fewer than 250 Forms W-2 for the previous calendar year and multi-employer plans. See IRS Notice 2012-9 for further information.