Employers with Fewer than 250 Employees are Not Required to Report Employer-Provided Health Coverage

Affordable Care Act (ACA)|Tax

By Megan Leo

Beginning in January 2013, The Affordable Care Act requires an employer to report the total cost of employer-provided coverage to each of its employees on Form W-2.  This reporting requirement is for informational purposes only, and the value of the employer’s excludable contribution to health coverage remains nontaxable to its employees.

The W-2 reporting is required for employers that provide “applicable employer-sponsored coverage” under a group health plan.  However, there is transitional relief for small employers.  Under this exception, any employer with fewer than 250 employees for the preceding calendar year is exempt from the W-2 reporting requirement for employer-sponsored health coverage until further guidance from the IRS is issued.  Further guidance from the IRS may change this transitional relief for small employers, but the revision would be applicable only to calendar years that start at least six months after the guidance is issued.

What does this mean to your entity with fewer than 250 employees?  You are not required to include the information related to employer-provided health coverage on the 2014 Forms W-2 that you will prepare in January of 2015.

If you have any questions on how this reporting requirement may affect your business, please contact the tax professionals at Schneider Downs, and sign up for our newsletters.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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