Reporting Requirements of Employer Sponsored Health Coverage

With the passage of the Affordable Care Act, employers are now required to report the cost of coverage under an employer-sponsored group health plan. By reporting the cost of health care coverage on the Form W-2, the value of the employee’s excludable contribution from his or her income is not taxable. This type of reporting is strictly for informational purposes and is meant to provide employees with useful and comparable consumer information regarding health care coverage.

All employers that provide “applicable employer-sponsored coverage” under a group health plan are subject to the reporting requirement. These include businesses, tax-exempt organizations, and federal, state and local government entities. There is transition relief available for certain employers and situations. The relief will apply to future calendar years until the IRS publishes additional guidance.

As far as reporting on the Form W-2, the value of the health care coverage will be reported in Box 12, with Code DD to indentify the amount. The amount should include both the portion paid by the employer and the portion paid by the employee.

For a complete overview of the types of coverage that employers must report on the Form W-2, please visit

*To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or tax related matter.