Employers must report health plan costs in 2012

The IRS released new guidance on the requirement that employers provide information to employees on the cost of employer-provided group health plan coverage (Notice 2012-9). The guidance comes in the form of 39 questions and answers. The IRS made this requirement optional for all employers for 2011, to give employers and payroll service providers more time to update payroll systems.

Employer-sponsored coverage includes coverage under any group health plan that an employer makes available to the employee and that is excludible from the employee’s gross income, but it excludes long-term-care coverage, any coverage under a separate dental or vision policy, or similar coverage (e.g. disability insurance, supplemental liability insurance, etc.). It also excludes amounts contributed to an MSA , HSA, or salary reduction contributions to a health flexible spending account.

The total reportable cost  includes both the portion of the cost paid by the employer and the portion paid by the employee, regardless of whether the employee paid through pretax or after-tax contributions.