EMPLOYER GUIDANCE REGARDING EMPLOYEE W-2’S

The U.S. Internal Revenue Service (IRS) issued Notice 2011-28 on March 29, 2011 – interim guidance to employers regarding informational reporting on each employee’s annual Form W-2 of the cost of the health insurance coverage they sponsor for employees.

The IRS emphasized that this new reporting to employees is for their information only, to inform them of the cost of their health coverage, and does not cause excludable employer-provided health coverage to become taxable. Employer-provided health coverage continues to be excludable from an employee’s income and is not taxable.

The Patient Protection and Affordable Care Act (PPACA), enacted in March 2010, provides that employers are required to report the cost of employer-provided health care coverage on the Form W-2. Notice 2010-69, issued in October 2010, made this requirement optional for employers for the 2011 Form W-2 (generally furnished to employees in January 2012).