Health Insurance Reporting on W-2s

The following information on reporting Employer Sponsored Health Coverage on the W2s is applicable to all employers.  Information on the health insurance coverage must be manually entered in Box 12 of the employee screen or on the Aatrix W2 grid; this information does NOT automatically generate from any check transactions entered into AccuBuild. In addition, some employers must also file the new Affordable Care Act Form 1095 if they qualify as an Applicable Large Employer (ALE).  Please refer to the separate document on ACA reporting for more information on form 1095.

"The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan. Reporting the cost of health care coverage on the Form W-2 does not mean that the coverage is taxable. The value of the employer’s excludable contribution to health coverage continues to be excludable from an employee's income, and it is not taxable. This reporting is for informational purposes only and will provide employees useful and comparable consumer information on the cost of their health care coverage." (a)

"The value of the health care coverage will be reported in Box 12 of the Form W-2, with Code DD to identify the amount. There is no reporting on the Form W-3 of the total of these amounts for all the employer's employees.  

In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee." (a)

(a) http://www.irs.gov/Affordable-Care-Act/Form-W-2-Reporting-of-Employer-Sponsored-Health-Coverage

AccuBuild W-2s

Choose from one of the following options for entering the cost of the employee health insurance on the W-2s:

•On the Payroll > Employees > Fed tab, manually enter the total amount (the cost to the employee AND the employer for the employee's health insurance) in field A, B, C or D of Box 12 with the IRS code DD.

•Instead of entering the amount on the employee screen, you may edit the W-2 information using the Aatrix program (Payroll > Tax Forms / E-File / W2s).  The W-2 grid will display the employee information in a grid format including a column for the employer paid health insurance.  This may be quicker than editing each individual employee, however, these entries will not be stored in the AccuBuild program.

•You may optionally report the employee portion of the health insurance in Box 14 of the W-2.  This is helpful to the employee so that they may see what portion of the total cost of the their health plan (Box 12) was deducted from the check.  This information will normally be displayed separately on the employee's check stub but it will not automatically display on the W-2 unless the deduction is a pre-tax deduction which is then reported in Box 12. Box 14 is primarily used by AB for reporting fringe benefits such as personal use of a company-owned vehicle or reimbursed moving expenses.  Keep in mind that only one amount and one description can appear in Box 14.  If you need more detail, then you may need to manually generate a separate itemized list for the employee.

DISCLAIMER: Please check with your CPA for payroll reporting requirements and questions. AccuBuild is STRICTLY a software company, and does NOT provide ANY type of tax advice. The information provided here is to alert you of these reporting requirements so that you can do the proper research with your CPA to determine how these new tax laws apply to your company and then take the necessary steps to implement these requirements.