All W-2s issued in January 2013 from most employers for wages paid in calendar year 2012 must for the first time include line 12 showing the benefit employees receive from their employer-sponsored health care.
As part of health care reform, revealing the employer amount is meant to increase transparency and awareness of the amount employers contribute to an employee’s health care costs. Bear this requirement in mind as you begin to gather W-2 information for January. If you have questions, consult your payroll service provider or accountant.
What are the rules for the new W-2 reporting obligations for small business?
· Aggregate reportable costs of healthcare coverage provided for employees should be reported on Line 12 of an employee’s W-2.
· If you are an employer with less than 250 Form W-2s for 2012, you will be exempt from filing.
· Multi-employer plans are also temporarily exempt from the filing requirements.
· Salary reduction amounts contributed to a health care FSA need not be reported; however, any amount available under an FSA in excess of the salary reduction amounts must be included.
· Aggregate reportable costs do NOT include:
o 2% administrative costs for COBRA coverage.
o Costs of employer-provided coverage included in income when the employee is a 2% shareholder of an S Corp.
o Amounts contributed to an health reimbursement arrangement (HRAs)
o Costs of self-insured plans of employers not subject to COBRA continuation coverage
These are just the highlights of the IRS requirements for new healthcare W-2 filing in 2013. Don’t wait until the end of January to try to understand your small business’ obligations. Penalties for failing to comply with the requirements can mean a big impact on your small business. Small businesses can face up to $200 per improperly or unfiled W-2 up to a $3 million cap. Moreover, if the IRS finds that the business failed to provide the correct amount due to intentional disregard, the amount can increase to $250 per W-2 with no cap on the total amount.
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Please be advised that, based on current IRS rules and standards, any advice contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty that the IRS may assess related to this matter. Any information contained in this article, whether viewed or subsequently printed, cannot be relied upon as qualified tax and accounting advice. Any information contained in this article does not fall under the guidelines of IRS Circular 230.
Copyright Information 2013 Professional Association of Small Business Accountants