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IRS Issues New Guidance on W-2 Reporting of Health Plan Costs - Emil Estafanous, CPA : Emil Estafanous, CPA

IRS Issues New Guidance on W-2 Reporting of Health Plan Costs

The IRS expelled new superintendence on a requirement that employers yield information to employees on a cost of employer-provided organisation health devise coverage (Notice 2012-9). The superintendence comes in a form of 39 questions and answers. It supersedes Notice 2011-28 and creates changes to mandate that were released in Notice 2011-28.

The Patient Protection and Affordable Care Act, P.L. 111-148, requires employers to news a “aggregate reportable cost” of “applicable employer-sponsored coverage” underneath an employer-sponsored organisation health devise on Form W-2, Wage and Tax Statement. To give employers some-more time to refurbish their payroll systems, a IRS done this requirement discretionary for all employers in 2011 (Notice 2010-69). The initial time that employers need to news these amounts is on 2012 Forms W-2 furnished in Jan 2013. Last year, a IRS supposing serve service for tiny employers filing fewer than 250 Forms W-2 by creation a stating requirement discretionary for them in 2013 (Notice 2011-28).

Applicable employer-sponsored coverage means coverage underneath any organisation health devise that an employer creates accessible to a worker and that is excludible from a employee’s sum income underneath Sec. 106, though it excludes long-term-care coverage, any coverage underneath a apart dental or prophesy policy, or any coverage described in Sec. 9832(c)(1) (for example, collision or incapacity income insurance, supplemental guilt insurance, etc.). It also excludes amounts contributed to an Archer medical assets comment (MSA) or a health assets comment (HSA), or income rebate contributions to a health stretchable spending comment (FSA), nonetheless special manners request in last total reportable cost where a employer offers a health FSA.

The total reportable cost generally includes both a apportionment of a cost paid by a employer and a apportionment paid by a employee, regardless of either a worker paid by pretax or after-tax contributions. The amounts contributed to Archer MSAs and HSAs are excluded. Salary rebate contributions to a health FSA are also excluded, though to a border a volume of a health FSA exceeds a employee’s income rebate contributions for a year, it is enclosed in a total reportable cost.

Notice 2012-9 includes a following changes:

  • Expands a orthodox grant from stating for federally famous Indian genealogical governments to embody employers that are tribally franchised companies unconditionally owned by federally famous Indian genealogical governments, until serve superintendence is issued.
  • Clarifies that a grant from stating for employers who are compulsory to record fewer than 250 Forms W-2 relates for 2012 Forms W-2 (and for Forms W-2 for after years unless and until serve superintendence is issued). An employer who was compulsory to record fewer than 250 Forms W-2 for 2011 will be free from a stating requirement for 2012. If an employer filed fewer than 250 Forms W-2 usually since a employer used an representative to record a forms, a grant does not apply.
  • Modifies a requirement for associated employers not regulating a common paymaster so that they are compulsory to news a total reportable cost on one employer’s Form W-2 or allot a cost among a employers regulating a reasonable allocation method.
  • Clarifies that a cost of coverage does not embody amounts includible in income underneath Sec. 105(h) (excess reimbursements for rarely compensated individuals) or underneath a requirement that 2% S house shareholder-employees embody their premiums in income.

Notice 2012-9 also provides superintendence on a series of issues not addressed in Notice 2011-28. These embody how to provide costs of coverage underneath employee-assistance programs or wellness programs; how to provide costs of coverage underneath health payment arrangements (HRAs); and how to calculate a reportable volume for coverage when usually a apportionment of a coverage constitutes coverage underneath a organisation health plan.

About Emil Estafanous, CPA
Certified Public Accountant (CPA) Tax Professional committed in representing taxpayers and resolving their tax problems.

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