Value Reporting Requirement – Not Taxable
Starting in tax year 2011, the Affordable Care Act required employers to report the value of the health insurance coverage they provide employees on each employee’s annual Form W-2. However, to provide employers the time they need to make changes to their payroll systems or procedures in preparation for compliance with this requirement, the IRS made that reporting by employers optional in 2011, but mandatory in 2012 for employers with more than 250 W-2’s.
This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludable from an employee’s income, and it is not taxable.