EMPLOYER HEALTH INSURANCE COVERAGE REPORTING
Under the Health Care Act, beginning January 1, 2011, an employer must disclose on each employee's annual Form W-2 the value of the employee's health insurance coverage sponsored by the employer. If an employee enrolls in employer-sponsored health insurance coverage under multiple plans, the employer must disclose the aggregate value of all such health coverage. Employers should also be aware of the following considerations:
- Reporting isn't required for the amount of any salary reduction contributions to a flexible spending arrangement (FSA). For example, if an employee enrolls in employer sponsored health insurance coverage under a major medical plan, a dental plan, and a vision plan, the employer must report the total value of the combination of all of these health related insurance policies.
- Employers must generally use the same value for all similarly situated employees receiving the same category of coverage (such as single or family health insurance coverage).
- The value of employer-sponsored health insurance coverage is found by calculating the applicable premiums for the tax year for the employee under the rules for COBRA continuation coverage, including the special rule for self-insured plans. The value reported on Form W-2 is the portion of the aggregate premium. If the plan provides for the same COBRA continuation coverage premium for both individual coverage and family coverage, the plan must calculate separate individual and family premiums for this purpose.
The reporting requirement has not changed, as related to the cost of employer-sponsored coverage for amounts contributed by an employer to any Archer medical savings account of an employee or the employee's spouse or to a health savings account of an employee or the employee's spouse.
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