W-2 Reporting of Employer-Sponsored Health Coverage

Where the Cost of Health Coverage is Entered on Form W-2

The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan on Form W-2, Box 12, with Code DD. This is for information purposes only. The amount reported in Box 12 for health care coverage is not taxable.

There is no reporting on the Form W-3 of the total of these amounts for all the employer’s employees.

In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee.

Note: An employer is not required to issue a Form W-2 solely to report the value of the health care coverage for retirees or other employees or former employees to whom the employer would not otherwise provide a Form W-2.

The value of the employer’s excludable contribution to health coverage continues to be excludable from an employee's income, and is not taxable. Reporting the cost of health coverage on an employee's W-2 will provide employees useful and comparable consumer information on the cost of their health care coverage.

Employers that provide "applicable employer-sponsored coverage" under a group health plan are subject to the reporting requirement. This includes businesses, tax-exempt organizations, and federal, state and local government entities (except with respect to plans maintained primarily for members of the military and their families). However, federally recognized Indian tribal governments are not subject to this requirement.