The IRS has given smaller employers a little more breathing room on the new W-2 health coverage cost reporting requirements.
The main purpose of the new guidance was to grant smaller employers an extended reprieve from the mandate to report the cost of employees’ health insurance on W-2 statements.
Now companies that issued fewer than 250 W-2s will not be required to report the cost of health coverage prior to 2014.
That means, at the earliest, smaller employers will have to report the cost of coverage on 2013 W-2s (which will be issued in 2014). The IRS also said the reporting deadline will continue to be pushed back until further guidance is issued.
Last fall, the IRS pushed back the requirement from 2011 to 2012. So up until this latest guidance was released, it was expected that all employers would have to report the insurance costs on employees’ 2012 W-2s (issued in 2013). But now only larger employers will have to meet that 2012 requirement.
Tax issues, retiree benefits
The new guidance also clears up major concerns employees had about taxes and retiree benefits.
According to the IRS:
- Employer-provided health coverage will continue to be excludable from an employee’s income. It will not be taxed. The reporting requirements are meant only to inform employees of the cost of their health insurance.
- Employers will not have to issue W-2s to retirees receiving company-provided health insurance while no longer being paid.
Info: IRS Notice 2011-28
