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Health Care Act w-2 reporting

Vernon Reizman's Profile

How are people handling the new 2012 requirement to add the employer provided cost of health care onto w-2 forms? We are trying to have ADP add it each payroll so that it does not need to be calculated at year end but it is a cumbersome process for handling exceptions. Are most waiting till year end 2012 to add it manually?

Answers

Topic Expert
Brenda Goudey
Title: CFO/VP of Finance
Company: KDR Designer Showrooms
(CFO/VP of Finance, KDR Designer Showrooms) |

At this point, my plan is to wait until year end. Although we're a small company with about 35 participants, we have two different health plans with slightly different employer contribution amounts that renews mid-year - when the amounts will change. I think it will be easier just to wait until year end and record what happened after the fact.

Topic Expert
Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Pardon the question, is the W2 reporting going to be statistical only or will it be reported as a taxable benefit to the employee. It's been so long since Obamacare was announced and so much noise about changes and challenges to the laws, it's a bit hard to keep track.
Can anyone cite any official sources? Thanks!

Topic Expert
Vernon Reizman
Title: CFO
Company: RCM Industries, Inc.
(CFO, RCM Industries, Inc.) |

Len--see the IRS website for notice #2011-28 "providing interim guidance that generally applies beginning with 2012 Forms W-2 (the forms required for the calendar year 2012 that employers generally are required to provide employees in January 2013). Employers are not required to report the cost of health coverage on any forms required to be furnished to employees before January 2013." At this point the inofrmation is being gathered for mostyly analytical purposes but it will serve to identify in the future those who owe "cadillac" tax as well as provide a base line for generating tax revenue some day.

Sara Voight
Title: Controller
Company: Critical Signal Technologies, Inc
(Controller, Critical Signal Technologies, Inc) |

My understanding from the original law was that this was statistical only. My practice has always been to track this information and provide to staff when doing their annual salary adjustments (most companies I worked for kept these separate from annual reviews). I would provide a summary sheet which showed how much we contributed on their behalf for all of their benefits. We are not on a calendar year renewal for our medical benefits, so keeping a spreadsheet and then inputting the total in the correct field at year-end is what we are planning.

My peers locally all believe the statistical approach is the first step that might lead to taxing the premiums in the future.

In case you are not familiar and you offer long term disability for your staff without requesting they pay you back, there is a potentially huge tax savings you can implement. We chose to report the value of the LTD policy premium as taxable on the employee's W-2. While very few people actually use the policy, it only takes one who uses it to sing the praises of this option. When the premium is taxed, any benefits paid are not taxed. That can be a significant savings for someone drawing disability at a reduced rate in the first place. Again, to make it easier on our payroll processing folks, we maintain a spreadsheet and input one number at year end. We also had to track so we could add to their taxable wages as appropriate anyone who terminated during the year.

Topic Expert
Shannon Mathews
Title: Controller
Company: Aldrich Services LLP
(Controller, Aldrich Services LLP) |

That is a great idea. I'll have to mention it to my HR/payroll team.

Topic Expert
Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Thanks Sara, I am sure others will find that helpful too.

Topic Expert
Brenda Goudey
Title: CFO/VP of Finance
Company: KDR Designer Showrooms
(CFO/VP of Finance, KDR Designer Showrooms) |

Sara, I agree with your peers that tracking this information is the first step to taxing the benefits. Once the numbers are available, it will be very easy for future politicians to caclulate the amount of tax dollars that are going 'uncollected'.

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