On October 12, 2010, the IRS released a draft Form W-2 for employers for 2011. Employers use Form W-2 to report wages and employee tax withholding. The IRS also announced that it will defer the requirement that employers report the cost of coverage under an employer-sponsored group health plan. Therefore, employer reporting of coverage costs is optional for 2011. The deferral allows employers additional time to make changes to their payroll systems or procedures in preparation for compliance with the new reporting requirement. The IRS intends to publish guidance on the new reporting requirement later this year.
Although reporting the cost of coverage will be optional with respect to 2011, the IRS continues to stress that the amounts reportable are not taxable. That is, the new reporting requirement is intended to be informational only and provide employees with greater transparency into overall health care costs. The new reporting requirement is one of the tax provisions mandated by the Affordable Care Act.