The Internal Revenue Service (IRS) in January offered additional guidance on a provision in the Patient Protection and Affordable Care Act that will require employers to report the cost of coverage under an employer-sponsored group health plan on each employee’s W-2 form. 

Under the new guidance, the IRS reinforced its previous statements that reporting is optional for 2011 W-2’s that will be issued this month, but will become mandatory on 2012 W-2’s issued in 2013. Employers who distribute fewer than 250 W-2’s are exempt from the reporting requirement until at least 2014, and possibly longer. 

The guidance also clarifies that employers can, but are not required to, report contributions to health reimbursement arrangements in calculating health care costs. In addition, the cost of providing coverage through employee assistance programs, wellness programs or onsite medical clinics is not required to be reported if the employer does not charge premiums for the coverage to COBRA beneficiaries.

The cost of coverage that is taxable to employees, such as for a dependent over age 26, must be reported on the W-2 and contributions employees make to flexible spending accounts are to be excluded from the health care cost figures. 

For more information, visit the IRS website.