New W-2 reporting requirement

[Chris_]

I received this in an email at work while I was looking for my W2.

New reporting requirement in 2012 Form W-2, Box 12 DD:  The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan for informational purposes. Such cost is reported in Box 12 DD of the Form W-2.  Please read the following for further clarity on the same:

The Patient Protection and Affordable Care Act (PPACA) require that *** disclose the aggregate value of their employer-sponsored health coverage to each employee on form W-2, Box 12 DD.  In Box 12 DD,   *** has reported the total cost of your coverage for the *** group plan in 2012. The amount listed in Box 12 DD is exempt from employee's gross income and is Tax Free. You are not being taxed on the amount being reported in Box 12 DD. This is only informational.

What is the purpose of this new reporting in Box 12 DD for 2012?

This is being mandated solely as an informational report to the Federal government. The government will use the data collected from the New W-2 cost reporting requirement to gain a better understanding of the aggregate value of health insurance that are being provided through employers. You will not be taxed on this amount.

Why is the government requiring it be on my W-2 when it has no financial impact to me?

This is only way the government has set up to collect this information to determine if it will implement a new method for assessing tax beginning in 2018.There is no financial impact to employees. This also meets the full disclosure of cost required in the Patient Protection and Affordable Care Act that employees become educated on the value of their Health Plan. Once again informational only.

What cost is included in box 12 DD?

According to the legislation and IRS guidance, *** must report costs for: Medical plan, Prescription drug plans, Dental & vision plans that are “integrated” into a group health plan so that they are part of the same insurance policy, contract or certificate of insurance. *** does not need to report costs of coverage for certain “HIPAA excepted benefits,” such as Life & Disability Insurance, Health Savings Accounts, and workers compensations

How is the aggregate cost of box 12 DD calculated?

The cost of coverage in Box 12 DD was determined under the rules for determining COBRA continuation of coverage premiums as set forth in Section 4980B(f)(4) of the Internal Revenue Code. Therefore, the aggregate cost of the employer-sponsored coverage that is reported on your W-2 is equal to the full *** COBRA rate for the coverage option in which you were enrolled for the time period enrolled in that plan. This is not the contribution you made towards you plan. It is the full cost of the COBRA continuation plan.

Example: Single employee enrolled in Premier for 3 months then adds a spouse and 6 months later adds a child and changes to Gold plan. The aggregate cost for this employee would be the Single Cobra Premier rate for 3 months; Then EE + 1 Cobra Premier Rate for 6 months; Then Family COBRA Gold rate for balance of year.

Why does his number seem high?

The cost for COBRA continuation coverage takes into account the maximum liability for claims costs and not the actual plan costs. Section 6051(a)(14) provides that for this purpose of reporting in Box 12 DD, the aggregate cost can be similar rules of 4980(f)(4) that refers to the definition of applicable premium for purposes of COBRA continuation as a reasonable estimate of the cost of providing coverage determined on an actuarial basis that takes into account past costs plus inflation.

Am I going to be taxed on this amount?

NO. You are not required to do anything with this information and value reported on your W-2 will NOT increase your taxable income. However, you may have to report it in your tax return, as you normally report other informational items reported in Box 12. Your tax consultant can guide you on that.

What do tell my tax preparer?

The Patient Protection and Affordable Care Act (PPACA) has required that Employers disclose the aggregate value of my employer-sponsored health coverage on form W-2, Box 12 DD.  Box 12 DD has the total cost of my coverage for the *** group plan in 2012. The amount listed in Box 12 DD is exempt from my gross income and is Tax Free as per the PPACA. This is only informational for the government and it should not be included in my wages for 2012.

IRS

[DefiantSix]

If I'm not required to do anything with the information, then the IRS shouldn't mind if I redact out that data until they show me a warrant for the information in question, right? 

[IassaFTots]

From what I gather, it is to confirm that the business is meeting it's ratio of wages to Healthcare cost.  So they can figure out how much to fine us.  The company, that is. 

[Freeper]

If I'm not required to do anything with the information, then the IRS shouldn't mind if I redact out that data until they show me a warrant for the information in question, right? 

The IRS already has that info.

[DefiantSix]

The IRS already has that info.

Then sure as shit they don't need to see it on my W-2.

[17 Oaks]

I received this in an email at work while I was looking for my W2.
IRS

"You will not be taxed on this amount."

ANYONE care to place a bet on this?  I say you will be taxed on this at some point in the future, that is the PURPOSE of collecting this data...

[Dori]

I might have this wrong, but I had the understanding that if you received a "Cadillac" type of employer paid insurance, that you will be taxed on anything over some acceptable number.  


It makes sense that the information would be on your W-2, as you will be fined on your tax return if you are not insured.  

[DefiantSix]

ANYONE care to place a bet on this?  I say you will be taxed on this at some point in the future, that is the PURPOSE of collecting this data...

No bets:  Government only does one of three things: Tax it into oblivion, regulate it into uselessness, or ban it from usefulness.


Yes Virginia, government DESTROYS every God forsaken thing it touches.

[17 Oaks]

No bets:  Government only does one of three things: Tax it into oblivion, regulate it into uselessness, or ban it from usefulness.


Yes Virginia, government DESTROYS every God forsaken thing it touches.

BINGO!

[thundley4]

Holy ****.  I just got mine in the mail today and looked at that box.  I'm glad I don't have to pay the full cost of my insurance.

[Chris_]

Still looking for mine.  I can't find the damn thing.

[Eupher]

No bets:  Government only does one of three four things: Tax it into oblivion, regulate it into uselessness, ban it from usefulness, or **** it up beyond repair (FUBAR).


Yes Virginia, government DESTROYS every God forsaken thing it touches.

FIFY

[Chris_]

I found my W-2.  Yes, that is quite a chunk of change.

I ran my numbers through a quick 1040 estimator.  My tax refund is... a dollar.

[IassaFTots]

Still looking for mine.  I can't find the damn thing.

Your W-2?  Can't you get it online?  OK never mind.  Well done on your return.  The closest I came to is 8.00.

[Crazy Horse]

I found my W-2.  Yes, that is quite a chunk of change.

I ran my numbers through a quick 1040 estimator.  My tax refund is... a dollar.

That's the way it's supposed to be boss man

[IassaFTots]

That's the way it's supposed to be boss man

I have a personal goal of getting to a margin of 20+ or -.  I come pretty close most years. 

[docstew]

Closest I ever came was a $5 refund once.

[Chris_]

I got some "tax documents" in the mail from my aunt's life insurance company.  I thought that money was tax exempt.

If it isn't, this may get ugly.

[Freeper]

I found my W-2.  Yes, that is quite a chunk of change.

I ran my numbers through a quick 1040 estimator.  My tax refund is... a dollar.

Not even enough to donate to the presidential election fund. 

I'm curious does anyone ever check yes on that box?

[Chris_]

Not even enough to donate to the presidential election fund. 

I'm curious does anyone ever check yes on that box?

They must... that money has to come from somewhere.

[Eupher]

I found my W-2.  Yes, that is quite a chunk of change.

I ran my numbers through a quick 1040 estimator.  My tax refund is... a dollar.

You did well, then.

You didn't give the government an interest-free loan.

Well done and h5.

[NHSparky]

Whoops--forgot to put that on my taxes.  Oh well.

[formerlurker]

I was wondering what that was - and they definitely will be taxing it in the future.  Count on it.

[Chris_]

I was wondering what that was - and they definitely will be taxing it in the future.  Count on it.

They wouldn't be putting it on your W-2 if they weren't planning on it.

I'm expecting an "announcement" in 2018 unless this disaster gets repealed before then.

[IassaFTots]

I am sure they will, but the deal is that employers can only charge people "x" amount, according to their w2 wages.  Employers don't know what spouses earn, so have no way to determine what the fair percentage is.  Basically, the way I see it, employers are gonna do whatever it takes to avoid penalties, and at some point we will start paying taxes on it. 

Either way, we are screw-ed.