Employers who issue 250 or more W-2 Forms are required to report the cost of employer-sponsored group health plan coverage on those forms. Additional information regarding this Affordable Care Act (ACA) requirement can be found on the IRS website (available here), along with Frequently Asked Questions and Answers (available here). Employers should note that the IRS has stressed that the W-2 reporting requirement is informational only and will not affect the amount includible in income or the amount reported in any other box on Form W-2. The stated purpose is to provide “useful and comparable consumer information to employees on the cost of their health care coverage.” (See Internal Revenue Bulletin No. 2012-4, Jan. 23, 2012.)
W-2 Report Box 12
The reported value of the cost of the health care coverage should be reported in Box 12 on the W-2 Form, using Code DD, and is not taxable for the employee. Employers who issue fewer than 250 W-2s are not subject to the requirement but may provide this information if they choose.
W-2 Report Available on Employer Portal
MedCost is prepared to assist you with this reporting by providing a W-2 report via the employer portal on the MedCost website. We will automatically provide reports for all plans with at least 100 covered employees.
The W-2 report lists each employee who was covered under your health plan during the 2022 calendar year, along with an amount that represents the cost of their health care coverage. This amount has been calculated using the allocation rate for the applicable plan option and tier of coverage. (For questions about rates, please contact your MedCost Benefit Services Account Manager.)
This report reflects:
new hires who may have been on the plan for only a portion of the year;
changes that may have occurred during the year, such as a change from one plan option to another, or a change from one tier to another; and
former employees who remained on your plan as COBRA participants or retirees.
Timing: The report will be available on the secure MedCost Employer Portal by January 18, 2023, in a folder called “W2 Reporting.” As a reminder, W-2s must be filed and provided to workers by January 31, 2023.
Please note, the W-2 report provides data only for the plans we administer for you. You are responsible for ensuring that benefit plans not administered by MedCost Benefit Services, but impacted by this ACA provision, are included appropriately in the aggregate cost reported to employees. Also, groups that transitioned to MedCost during 2022 will be responsible for supplementing this report with information for all months prior to the transition (for instance, with information from the prior administrator).
MedCost is here to assist you in any way we can with ACA reporting requirements. If you have questions or need additional information, please contact your MedCost Account Manager.