IRS Delays Health Plan Cost W-2 Reporting for Small Employers

The Internal Revenue Service (IRS) has issued new guidance which delays mandatory reporting of the cost of group health coverage on an employee’s W-2 form.  This “temporary relief” from the IRS affects small employers with fewer than 250 W-2 employees.

Initially, under the federal Affordable Care Act (ACA), employers were to begin reporting health coverage costs on employee W-2s starting with the 2011 tax year.  The timeline was then modified by IRS Notice 2010-69, which delayed mandatory reporting until the 2012 tax year and made 2011 tax year reporting voluntary.  Now, IRS Notice 2011-28 further delays the W-2 reporting requirement until the 2013 tax year for employers that file fewer than 250 W-2 forms during the 2011 tax year.

IRS Notice 2011-28 also provides additional guidance and clarification on W-2 reporting for large employers who are either required to comply with the W-2 reporting starting with tax year 2012, or employers that voluntarily comply with W-2 reporting for the 2011 or 2012 tax years.