W-2 Reporting



The cost of employer-provided group health coverage generally must be reported on the Form W-2 issued to employees.Please note that until the issuance of further guidance, employers filing under 250 W-2s in the preceding calendar year are EXEMPT from this requirement (see Transition Relief below for this and other exemptions).

The Affordable Care Act (ACA) includes a provision which requires employers to report the total cost of employer-provided health coverage on Form W-2. Transition relief is available for certain employers and types of coverage in accordance with IRS Notice 2011-28. See the IRS Quick Reference Chart for a summary of reporting requirements.  

Coverage Subject to the Reporting Requirement

Employers must report the aggregate reportable cost of applicable employer-sponsored health coverage. Applicable employer-sponsored health coverage generally includes coverage under any group health plan which is excludable from the employee’s gross income, or would be excludable if it were employer-provided coverage. Certain types of coverage are not considered Applicable Employer-Sponsored Coverage.

Certain amounts are not included in the aggregate reportable cost:

The amount contributed through salary reduction by an employee health FSA is not included in the aggregate cost of employer-sponsored coverage, although certain flex credit may have to be reported.

Employers Subject to the Reporting Requirement

All employers that provide applicable employer-sponsored coverage during a calendar year are subject to the reporting requirement, unless they qualify for the transition relief described below. This includes private sector employers, state and local governments, churches and other religious organizations.

Interim transition relief announced in IRS Notice 2012-9 is available for employers that were required to file fewer than 250 Forms W-2 for the preceding calendar year, as well as certain other employers.

Method of Reporting on Form W-2

The aggregate reportable cost is reported on Form W-2 in Box 12, using code DD. This information is not required to be reported on Form W-3, Transmittal of Wage and Tax Statements.

See the Geek Out! pages for more on individuals with multiple employers and individuals that request a W-2 prior to the end of the calendar year.

Aggregate Reportable Cost of Applicable Employer-Sponsored Coverage

The aggregate reportable cost generally includes both the portion of the cost paid by the employer and the portion of the cost paid by the employee

Methods of Calculating the Cost of Coverage

If an employer charges the same rate for all employees regardless of their coverage, it can report the same amount for all employees for the period, using one of the methods described above. In addition, if the plan has different types of coverage (employee-only, family, etc.) and the employees in each of the coverage groups pay the same premium, then each coverage group can have the same reported amount for the period.

If an employee changes coverage during the year, an employer may use any reasonable method to determine the reportable cost for such period, such as using the reportable cost at the beginning of the period or at the end of the period, or averaging or prorating the reportable costs, provided that the same method is used for all employees with coverage under that plan. Similarly, if an employee commences coverage or terminates coverage during a period, an employer may use any reasonable method to calculate the reportable cost for that period, provided that the same method is used for all employees with coverage under the plan.

Please note that the reported amount must also reflect any cost increases or decreases that occur during the year. Failure to file a return with the IRS or furnish a statement to employees can result in penalties up to $260 per return/statement, with a maximum penalty of $3,178,500 (2016) and $3,193,000 (2017).  There is a $520 penalty per return/statement with no maximum for intentional failure.