ACA Reporting
ACA Compliance Lessons Learned From Recent Reporting Seasons
Common themes emerge when reflecting on recent ACA reporting seasons that can help employers reduce administrative burdens and improve accuracy.
Employers
Health Plan Coverage Reporting on Form W-2
Some employers must identify the cost of employer-provided health coverage on employees’ W-2 Forms.
As employers start the process of preparing W-2 data, remember that the Affordable Care Act requires some employers to inform employees about the cost of employer-sponsored group health plan coverage. The aggregate value to employees of coverage must be reported in Box 12, Code DD of employees’ Form W-2. The cost of health coverage is not taxable and the reporting is intended to provide employees information about health care costs.
Some employers are excepted from the reporting requirement. An employer does not have to report the health coverage on an employee’s Form W-2 if the employer was required to file less than 250 Forms W-3 for the preceding calendar year. For example, if an employer filed fewer than 250 Forms W-2 in 2022, the employer would not be required to report on the 2023 Form W-2.
The reporting requirement applies to applicable employer-sponsored coverage. This is generally coverage under a group health plan that an employer makes available to an employee that is not taxable to the employee. Medical plan coverage is included in the report. Free-standing dental and visions plans are not subject to the reporting requirement if the plans are excepted from HIPAA; but dental and vision coverage coupled with the medical plan could be subject to the reporting requirement. Employers do not have to report the cost of an EAP, wellness program or on-site medical clinic if the employer would not charge a premium for the coverage to COBRA participants. Indemnity insurance paid with after-tax dollars does not have to be reported. Health flexible spending accounts funded with employee contributions, only, are not reported, but a reporting obligation may arise if an employer contributes to the FSA or otherwise provides flex-dollars through a Code section 125 plan. Employers may choose to include in the aggregate reportable cost the cost of coverage that is not required to be reported.
The aggregate reportable cost includes both the employer and employee-paid portion of coverage, regardless of whether the employee paid for that coverage through pre-tax or after-tax contributions. It includes the cost expended for coverage of the employee, as well as for any person covered under the plan because of a relationship to the employee (i.e., Employee coverage, as well as Dependent/Family coverage).
BAS offers a W-2 Reporting tool to provide information to employers on the costs allows that should be reported for health coverage.
If you have any questions or concerns, please reach out to us at service@basusa.com.
Benefit Allocation Systems (BAS) provides online solutions for: Employee Benefits Enrollment; COBRA; Flexible Spending Accounts (FSAs); Health Reimbursement Accounts (HRAs); Leave of Absence Premium Billing (LOA); Affordable Care Act Record Keeping, Compliance & IRS Reporting (ACA); Group Insurance Premium Billing; Property & Casualty Premium Billing; and Payroll Integration.
MyEnroll360 integrates with major insurance carriers for enrollment eligibility management (e.g., Blue Cross, Blue Shield, Aetna, United Health Care, Kaiser, CIGNA and others), and with leading payroll platforms for enrollment deduction management (e.g., Workday, ADP, Paylocity, PayCor, UKG, and others).
This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.