IRS Issues Guidance on Form W-2 Reporting of Employer-Sponsored Health Coverage

On March 29, 2011, the Internal Revenue Service (IRS) issued interim guidance to employers on the requirement, as a result of the Affordable Care Act, to report the cost of employer-provided health insurance coverage on Form W-2. Using a question-and-answer format, the IRS provided guidance for employers on how to report, what coverage to include and how to determine the cost of the coverage. The IRS emphasized that the W-2 reporting requirement is only for informational purposes and the amounts that are reported will not be taxable. While the requirement to report the cost of employer-provided health insurance coverage on the 2011 Forms W-2 is optional for all employers, according to an October 2010 announcement, the interim guidance explains that reporting is now optional for 2012 and beyond for employers filing fewer than 250 W-2 forms, at least until further guidance is issued. AGC will continue to monitor any new developments and will share additional guidance from the IRS as it becomes available.