Prepare for Additional W-2 Reporting

This week, we want to update you on new W-2 reporting requirements that will go into effect January 1, 2011 as part of the Patient Protection and Affordable Care Act. Although these new requirements have not garnered much attention, especially given the volume of other health care reform changes, we think they're definitely worth noting.

New requirements stipulate that employer-sponsored health coverage must be valued and reported on employee W-2s. Though these amounts will not be part of taxable income, they will be tracked in preparation for the 2018 excise tax for employer-sponsored coverage, often referred to as the "Cadillac Tax."

New reporting requirements include costs related to:

• Medical plans
• Prescription drug plans
• Dental and vision plans, unless they are "stand alone"
• Employer funded contributions to Health Reimbursement Arrangements (HRAs)
• Executive physicals
• Onsite clinics if they provide more than de minimus care
• Medicare supplement policies
• Employee Assistance Programs (EAPs)

Interestingly, the regulations cover HRA contributions, but not Health Savings Account (HSA) contributions.

What should you do?

• Check in with your payroll provider to ensure they will be able to meet your reporting needs. Even though these amounts are not due until early 2012, if employees leave your company at any time during 2011, they are entitled to request their W-2 early.
• Watch for the IRS to release final regulations - we'll let you know when that happens!
• If you have an onsite clinic, decide how you will value these services for inclusion. Will it be an average across your population? Actual utilization with cost estimates?
• Read a summary of these changes from the National Association for Health Underwriters. It's researched and well written.
• Talk to us. We understand this can be confusing - and we're here to help.

Thank you for your time and have a great week.