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. This requirement stems from the Affordable Care Act (ACA). Additional information regarding this 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 emphasized 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 of the reporting 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 Reporting: Box 12
The cost of the health care coverage should be reported in Box 12 on the W-2 Form, using Code DD. This amount is not taxable for the employee. Employers who issue fewer than 250 W-2 forms are not required to comply with this reporting requirement but may choose to provide this information voluntarily.
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 generate reports for all plans with at least 100 covered employees.
The W-2 report will include each employee covered under your health plan during the 2024 calendar year, along with an amount representing the cost of their health care coverage. This amount is calculated using the allocation rate for the applicable plan option and tier of coverage. (For questions about rates, please contact your MedCost Account Manager.)
This report will reflect:
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New hires who were covered for only part of the year.
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Changes during the year, such as switching between plan options or tiers.
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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 10, 2025, in a folder titled “W2 Reporting.” As a reminder, W-2 forms must be filed and provided to employees by January 31, 2025.
Important Note
The W-2 report will provide data only for the plans administered by MedCost. You are responsible for ensuring that any benefit plans not administered by MedCost, but impacted by this ACA provision, are also included in the aggregate cost reported to employees. Additionally, if your group transitioned to MedCost during 2024, you will need to supplement this report with information for the months prior to the transition (e.g., from your previous administrator).
MedCost is here to assist you with ACA reporting requirements. If you have questions or need further assistance, please contact your MedCost Account Manager.