Enter your email address below
to sign up for our

FREE Newsletter,
The Payroll Advi$or!

New Health Insurance Reporting Required on W-2

Under the Affordable Care Act (ObamaCare), payroll depts. should note that employers are now required to report the cost of health insurance coverage under an employer-sponsored group health plan on Form W-2. Originally legislated to kick in in 2011, the IRS granted transitional relief to all employers for 2011. For the year 2012, only employers with 250 or more employees will be required to report this benefit on employee W-2′s. The IRS noted that reporting the cost of health care coverage on the Form W-2 does not mean that the coverage is taxable. The value of the employer’s excludable contribution to health coverage continues to be excludable from an employee’s income, and it is not taxable. The IRS also noted that this reporting is for informational purposes only and will provide employees useful and comparable consumer information on the cost of their health care coverage. Employers that provide “applicable employer-sponsored coverage” under a group health plan are subject to the reporting requirement. This includes businesses, tax-exempt organizations, and federal, state and local government entities (except with respect to plans maintained primarily for members of the military and their families). However, federally recognized Indian tribal governments are not subject to this requirement.

What is the purpose of this new reporting requirement? Under ObamaCare, there is a legislated penalty for those employers and taxpayers who are not covered by health insurance. The reporting requirement will eventually assist the IRS in verifying that taxpayers have coverage.  Additionally, the new reporting requirements will help identify those taxpayers who will be subjected to the so-called Cadillac tax on high-dollar insurance plans (effective in 2018)

The IRS has also recently defined other transitional relief details.  For certain employers, types of coverage, and situations, there is transition relief from the requirement to report the value of coverage on the 2012 Forms W-2 (the forms for calendar year 2012 that employers generally are required to provide employees in January 2013). This relief will apply to future calendar years until the IRS publishes additional guidance. However, any guidance that expands the reporting requirements will apply only to calendar years that start at least six months after the guidance is issued.

The value of the health care coverage will be reported in Box 12 of the form W-2 with Code DD to identify the amount. There is no reporting on the Form W-3 of the total of these amounts for all the employer’s employees. In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee.

An employer is not required to issue a Form W-2 solely to report the value of the health care coverage for retirees or other employees or former employees to whom the employer would not otherwise provide a Form W-2.

It is to be noted that the IRS has stated that they are not discouraging early compliance and judging by the fairly limited transitional relief being granted, it is expected that many businesses will comply earlier than required as payroll systems are modified to account for the requirement. Note that Time & Pay is already set to comply! 

For further information on this topic, you can visit the IRS site here. 

 

Posted in News
A while back, the state came to our office to audit our payroll records. When the auditor found out Time & Pay did our payroll, she stopped, packed her briefcase and informed us there was no need for the audit. She was very confident we were compliant.
-K B – GR&P Co. Bristol, TN

Time & Pay is a  godsend for a small business like mine. I no longer have to worry about paying my employees or my payroll taxes accurately or on time!  Time & Pay takes care of everything for me!
-B M – Stellar Studios, Johnson City, TN

“We find your integrated timekeeping and payroll easy to use and more accurate than the time sheets we were using. My time is now freed up to take care of my patients and other aspects of my business. Thanks for making the transition to outsourcing my payroll easy and cost effective.”
-B W – Westmoreland, DDS, Johnson City, TN

“Time & Pay does a great job handling both our corporate and independent store accounts. The flexibility of their on-line capabilities gives us the information we need when we need it. Their response to our diverse needs has been excellent.”
-B G – HobbyTown USA, Omaha, Nebraska

“We had been doing our payroll in-house. When we reviewed your products and services, we found them to be both affordable and cost-effective. The transition to Time & Pay went very smoothly. We are very confident our payroll tax issues and confidentiality issues are now a thing of the past.”
-S T – D & S Dental, Johnson City, TN

“We have been using Time & Pay for a number of years. Their customer service is outstanding. I would recommend their products and services to anyone looking to get the most out of the payroll process and stay compliant with federal and multi-state payroll regulations.”
-M W – Royal Brass, Knoxville, TN

“Opening up a large retail operation, the last thing I wanted to concern myself with was payroll and all the compliance hassles. Time & Pay takes care of all my payroll needs. With their services, my payroll worries are eliminated. We would recommend your services to any one.”
-D K – DW Express LLC, Bristol, VA

“As a new company to Johnson City, we were glad to find a local quality payroll service provider. We had used a national provider in Florida and were well aware of the advantages of outsourcing. Time & Pay offers all that the big national firms provide and more, including local, prompt and courteous customer service!”
-K H – JD Squared, Johnson City, TN

“We had been doing payroll in-house for years and was looking for a cost effective alternative. Your systems and services have been able to provide us with information and reports we were not able to produce with our old system. You have freed our time to concentrate on more important accounting aspects of our business. With the excellent services you provide, we would not consider any other payroll processing system.”
-Kwick-Way Transportation Co, Gray, TN

“Having Time & Pay as a payroll service has been a wonderful partnership. Their customer service, punctuality and attention to detail have surpassed our expectations and we are glad to have them as a partner in conducting all of our payroll functions. I would highly recommend their services to companies, large and small.”  
-T W – Little Things, LLC, Chattanooga, TN

4-11-2014

Time & Pay Systems Safe From Latest Internet Security Breach

If you are wondering if you should be concerned about the latest breach of internet security and your Time & Pay data systems, the answer is No. The virus, the Heartbleed Bug, is the latest serious vulnerability in the OpenSSL cryptographic … Continue reading

READ MORE

Time & Pay Sponsors Chattanooga Cystic Fibrosis Walk

Time & Pay is pleased to be given the opportunity to sponsor the Cystic Fibrosis Chattanooga chapter Great Strides event  April 27, 2014. The Cystic Fibrosis Foundation has made great strides in finding a cure for CF and significantly improving … Continue reading

READ MORE

4-7-2014

Time & Pay announces New ATA App

Time & Pay is excited to announce a new smart phone app for our SwipeTime Automated Time and Attendance system.  This new app gives employees the capability of clocking in and out, change department/location/job, view pay period current hours worked and … Continue reading

READ MORE

Find us on Facebook! Find us on LinkedIn! Follow us on Twitter!
Independent Payroll Providers Association Member            Registered IRS E-Filer

Website designed and developed by Stellar Studios