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Small Business Employee Benefits and HR Blog

HRAs and W-2 Annual Reporting

April 9, 2012

As part of the Affordable Care Act (ACA), employers are required to report the cost of health benefits coverage under an employer-sponsored group health plan. The IRS issued Notice 2012-9 confirming that employers are not required to include the cost of coverage under a Health Reimbursement Arrangement (HRA) on employee W-2s. If the only coverage provided to an employee is an HRA, the employer is not required to report any amount on the Form W-2 for that employee. optional w-2 reporting hra

W-2 Reporting for HRAs is Optional in 2012

According to Notice 2012-9, which, until further guidance, contains the requirements for tax-year 2012 and beyond, the IRS is granting permanent relief to employers that sponsor HRAs:

"Q-18:  Is the cost of coverage under a Health Reimbursement Arrangement (HRA) required to be included in the aggregate reportable cost reported on Form W-2? 

A-18:  No.  An employer is not required to include the cost of coverage under an HRA in determining the aggregate reportable cost.  If the only applicable employer-sponsored coverage provided to an employee is an HRA, the employer is not required to report any amount under §6051(a)(14) on the Form W-2 for that employee."

Chart: Form W-2 Informational Reporting of the Cost of Employer-Sponsored Group Health Plan Coverage 

This chart below is based on IRS Notice 2012-9. Items listed as "optional" are designated as such based on transition relief provided by Notice 2012-9, and their “optional” status may be changed by future guidance. However, any such change will not be applicable until the tax year beginning at least six months after the date of issuance of such guidance.

Coverage Type

Report on form W-2

Do Not Reporton Form W-2

Optional
Reporting

Major medical

X

 

 

Dental or vision plan not integrated into another medical or health plan

 

 

X

Dental or vision plan which gives the choice of declining or electing and paying an additional premium

 

 

X

Health Flexible Spending Arrangement (FSA) funded solely by salary-reduction amounts

 

X

 

Health FSA value for the plan year in excess of employee’s cafeteria plan salary reductions for all qualified benefits

X

 

 

Health Reimbursement Arrangement (HRA) contributions

 

 

X

Health Savings Arrangement (HSA) contributions (employer or employee)

 

X

 

Archer Medical Savings Account (Archer MSA) contributions (employer or employee)

 

X

 

Hospital indemnity or specified illness (insured or self-funded), paid on after-tax basis

 

X

 

Hospital indemnity or specified illness (insured or self-funded), paid through salary reduction (pre-tax) or by employer

X

 

 

Employee Assistance Plan (EAP) providing applicable employer-sponsored healthcare coverage

Required if employer charges a COBRA premium

 

Optional if employer does not charge a COBRA premium

On-site medical clinics providing applicable employer-sponsored healthcare coverage

Required if employer charges a COBRA premium

 

Optional if employer does not charge a COBRA premium

Wellness programs providing applicable employer-sponsored healthcare coverage

Required if employer charges a COBRA premium

 

Optional if employer does not charge a COBRA premium

Multi-employer plans

 

 

X

Domestic partner coverage included in gross income

X

 

 

Military plan provided by a governmental entity

 

X

 

Federally recognized Indian tribal government plans and plans of tribally charted corporations wholly owned by a federally recognized Indian tribal government

 

X

 

Self-funded plans not subject to Federal COBRA

 

 

X

Accident or disability income

 

X

 

Long-term care

 

X

 

Liability insurance

 

X

 

Supplemental liability insurance

 

X

 

Workers' compensation

 

X

 

Automobile medical payment insurance

 

X

 

Credit-only insurance

 

X

 

Excess reimbursement to highly compensated individual, included in gross income

 

X

 

Payment/reimbursement of health insurance premiums for 2% shareholder-employee, included in gross income

 

X

 

Other Situations

Report

Do Not Report

Optional

Employers required to file fewer than 250 Forms W-2 for the preceding calendar year

 

 

X

Forms W-2 furnished to employees who terminate before the end of a calendar year and request, in writing, a Form W-2 before the end of that year

 

 

X

Forms W-2 provided by third-party sick-pay provider to employees of other employers

 

 

X

Chart Last Reviewed or Updated: 04-Aug-2012 / Source: irs.gov

More Information on the W-2 Reporting Requirements:

 

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