IRS Updates W-2 Health Care Coverage Reporting FAQ

On January 3, 2012, the IRS issued Notice 2012-09, which restates and amends last year’s Notice 2011-28 guidance on W-2 health coverage reporting. 

The Notice arrives just as many employers are processing their first payroll of 2012, the first payroll that is subject to the new reporting requirement. Recall that §9002 of the Affordable Care Act imposes this mandate, with the cost of all applicable coverage reported in Box 12 as Code DD.

Notice 2011-28 was a 31-question FAQ. Notice 2012-09 builds upon the earlier framework, adding eight more questions and revising some of the answers (under the heading of “Additional Issues”). Here are some highlights: Click Here to read more!

• Small Employer Exception. Employers with fewer than 250 W-2s in 2011 still have an indefinite delay, as do Indian tribal governments. An employer that uses a §3504 agent does not qualify for the exemption if the employer would have exceeded the 250 threshold without the agent.
• Health FSAs. The IRS clarified that only the amount that exceeds an employee’s salary reduction (if any) must be reported. An example would be an employer’s matching contribution.

Click Here to read more!