Compliance Corner: IRS Notice 2012-09 - W2 Reporting Update
On January 3, 2012, the Treasury Department issued IRS Notice 2012-09, which relates to one of the requirements under PPACA - Employer W-2 reporting of the aggregate cost of group health coverage provided to employees. Notice 2012-09 amends and supersedes earlier interim guidance issued last March.
Below are some key new clarifications, guidance and Q&A's under Notice 2012-09:
Modifies Q&A-3 to clarify the application of the interim relief from the reporting requirement for employers filing fewer than 250 Forms W-2 for the preceding calendar year.
Adds a new example to Q&A-19 that demonstrates that the reporting requirement does not apply to coverage under a health flexible spending arrangement (FSA) if contributions occur only through employee salary reduction elections.
Modifies Q&A-20 to clarify that the standard for determining whether coverage under a dental plan or vision plan is subject to the reporting requirement is based upon the same standard for determining whether the coverage is subject to the rules set forth in the regulations under HIPAA.
Provides that employers are not required to include the cost of coverage under an employee assistance program (EAP), wellness program, or on-site medical clinic in the reportable amount if the employer does not charge a premium with respect to that type of coverage provided under COBRA to a qualifying beneficiary (Q&A-32).
Clarifies that employers may voluntarily include the cost of coverage under programs not required to be included under applicable interim relief, such as the cost of coverage under a Health Reimbursement Arrangement (HRA) (Q&A-33).
Clarifies how to calculate the reportable amount for coverage only a portion of which constitutes coverage under a group health plan (Q&A-34).
Clarifies how to calculate the reportable amount if an employer is provided notice after December 31 of a calendar year of events that occurred on or before December 31 of a calendar year that affect the prior year's coverage, such as an employee providing an employer notice of a divorce or other change in family status that occurred during a prior calendar year (Q&A-35).
Clarifies how to calculate the reportable amount where coverage extends over the payroll period including December 31 (Q&A-36).
Provides that the reportable amount is not required to be included on a Form W-2 provided by a third-party sick pay provider (Q&A-39).
W-2 Health Value Reporting Chart
On February 15, 2012, the IRS posted a chart on the W-2 informational reporting on the cost of employer-sponsored group health plan coverage, as well as updated FAQ's. The links are provided below. The chart is based on IRS Notice 2012-09, which until further guidance, contains the requirements for tax-year 2012 and beyond.
For compliance related questions, contact David Follansbee, VP of Operations at firstname.lastname@example.org
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