With W2 season upon us, a few of you might be looking for some COBRA guidelines about how to report the value of health coverage on your W-2 forms.
To quickly review, the 2010 Patient Protection and Affordable Care Act included a provision that requires the value of any employer-provided health coverage to be included on each employee's IRS Form W-2.
Did you forget to include that small detail this year? Don't panic!
First of all, this reporting requirement is optional for 2011, but required in 2012. Also, any employer issuing fewer than 250 W-2s can qualify for a postponement until the 2013 W-2s are due.
When you're ready to report, the value of employer-sponsored health coverage is to be reported in Box 12 of the W-2, using the code “DD.”
What are the COBRA guidelines?
You are not required to report the value of coverage provided for a COBRA participant. You are only required to report the value of the coverage provided during the time the person was an active employee. If you're wondering what value to place on the health coverage provided, you can use the amount charged for COBRA (less the 2% administrative fee) as a guide. Once again, this W-2 requirement does NOT apply to COBRA participants. It only pertains to active plan participants.
Need more information?
Here are two IRS guidance notices that can help: