To provide employees with useful consumer information regarding the value of their health care benefits, the Affordable Care Act (ACA) requires employers providing applicable employer-sponsored coverage under a group health plan to report the value of the health care coverage on their employees’ W-2 (Wage and Tax Statement) Forms. This amount is not taxable and should include both the amount paid by the employer as well as the portion paid by the employee.
- Employers are required to provide this information by Jan. 31 for the previous year. Therefore, by Jan. 31, 2016, employers should have documented this on their employees’ 2015 W-2 Forms.
- The cost must be reported in Box 12 (using Code “DD” to identify the amount) of an employee’s W-2.
- The reporting requirement currently applies only to employers who filed 250 or more eligible employee W-2 Forms in the preceding year.
- The amount reported should include the amount paid by the employer and the portion paid by the employee, regardless of whether it is paid by the employee on a pretax or post-tax basis.
What is included in the value of applicable employer sponsored coverage?
- Applicable employer-sponsored coverage generally includes any employer-provided group health plan coverage under an insured or self-insured health plan that is excludable from the employee’s gross income. Though there are a few exceptions, the amounts that employers need to report include pretax and post-tax contributions paid by both the employer and the employee for health coverage.
- Aflac policies this may apply to include: Hospital Indemnity, Hospital Intensive Care, Cancer, Specified Health Event, Specified Disease and Critical Illness.
- Non-elective contributions made by the employer towards health Flexible Spending Arrangements (FSA).
- Cost of coverage under an Employee Assistance Program (EAP), wellness program or on-site medical clinic - if the employer charges a premium for the coverage for purposes of COBRA or other federally required continuation of coverage. If the employer is not subject to COBRA or any federal continuation-of coverage requirements, this type of coverage does not have to be reported.
What is considered exempt?
- Dental and vision coverage, if not integrated into the major medical plan. Optional reporting permitted.
- An employee’s contribution to an FSA
- An employer or employee’s contribution to several voluntary supplemental policies does not need to be reported, including: Aflac’s accident, disability, long-term care coverage, standalone dental and vision coverage, and health care spending account contributions (FSAs, HRAs, HSAs and Medical Savings Accounts). Optional reporting permitted for HRAs.
Optional reporting: Though reporting is not required for certain benefits, employers may be permitted to report on certain benefits if they are already incorporated into the COBRA premium, including: an EAP, wellness program or on-site medical clinic without a premium charge, dental and vision plans not integrated into major medical plans, and HRAs.
Aflac’s W-2 reporting tool
- Employers with Aflac have access to the online W-2 Reporting tool through Aflac Business Services. To view and print benefits reports, log in to Aflac Business Services or, if you receive paper statements, sign up today at: aflac.com/business/business_services. This tool, which is for informational purposes only, may be helpful as you prepare for your W-2 reporting of employer-sponsored health care coverage.