by James A. Woehlke, Esq., CPA
General Counsel / COO, MBL Benefits Consulting Corp.


The Patient Protection and Affordable Care Act (the ACA*) was enacted on March 23, 2010. The ACA includes a requirement that employers are to report the cost of an employee’s group health care on the employee’s annual wage statement, the W-2 form. While the ACA originally required this reporting on W-2’s issued in 2011, on October 12, the IRS made compliance in 2011 voluntary and deferred the requirement until 2012.

The draft form W-2 for 2011, the voluntary compliance year, includes codes for reporting health care costs if the employer so chooses.

The IRS News Release also attempts to debunk an Internet urban legend that reporting health care coverage causes it to be no longer exempt from taxes. Specifically, the release states:

This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludible from an employee’s income, and it is not taxable.

If you have questions about the new W-2 reporting requirement, please contact your MBL Benefits consultant or the author at jwoehlke@mblbc.com.

* For simplicity, the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act are collectively referred to as the Affordable Care Act, or ACA.

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Additional resources

IRS Notice 2010-69: http://www.irs.gov/pub/irs-drop/n-2010-69.pdf

IRS News Release: http://www.irs.gov/newsroom/article/0,,id=228881,00.html

IRS news summary: http://www.irs.gov/newsroom/article/0,,id=220809,00.html?portlet=6

Article: P. Marathas, Jr., “Setting the Record Straight on the W-2 Panic”, Employee Benefit News Legal Alert, http://ebn.benefitnews.com/news/setting-the-record-straight-on-the-w-2-panic-2684258-1.html

Rev. 10/27/2010.

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