The Affordable Care Act (ACA) requires employers to report the cost of coverage under an employer-sponsored group health plan. Reporting the cost of health care coverage on the W-2 does not mean that the coverage is taxable. The value of the employer’s contribution to health coverage continues to be excludable from an employee’s income, and it is not taxable.
Employers that provide “applicable employer-sponsored coverage” under a group health plan are subject to the reporting requirement. This includes businesses, tax-exempt organizations, and federal, state and local government entities (except with respect to plans maintained primarily for members of the military and their families). If you were required to file less than 250 W-2s in the previous calendar year, reporting health care coverage is optional for you.
In Box 12 of the W-2, employers should report the portion paid by the employer as well as the portion paid by the employee. The IRS provides a helpful chart that illustrates the types of coverage that employers must report. It is only for completing Box 12, Code DD. You may also find the chart on our website.
For more information on health coverage reporting requirements, refer to the IRS’ questions and answers page – https://www.irs.gov/uac/Employer-Provided-Health-Coverage-Informational-Reporting-Requirements:-Questions-and-Answers.