What the Requirement Is
The ACA requires many employers to report the total cost of employer-sponsored health coverage on employees’ Form W-2, in Box 12 using Code DD.
This is for information only. It shows employees the value of their health benefits, and it doesn’t make the coverage taxable.
This W-2 reporting is separate from the W-2 affordability safe harbor, which uses Box 1 wages to measure affordability.
Which Employers Report
- Employers that filed 250 or more Forms W-2 for the prior calendar year are generally required to report.
- Employers that filed fewer than 250 aren’t currently required to report, though they may choose to.
What’s Reported
The amount reported is the total cost of coverage for the calendar year, both the employer’s and the employee’s share, including amounts employees pay pre-tax. The cost is generally based on the plan’s COBRA premium or another method the IRS allows.
Generally included:
- Major medical coverage, fully insured or self-funded
- Prescription drug coverage that’s part of the medical plan
Not required to be reported:
- Stand-alone dental and vision plans
- Health savings account (HSA) contributions
- Health reimbursement arrangements (HRAs)
- Employee assistance programs (EAPs), wellness programs and on-site clinics that qualify as excepted benefits
- Long-term care insurance
- Coverage under a multiemployer (union) plan
Important: This information is provided for general educational purposes. It is not legal or tax advice. How these rules apply depends on each employer’s specific circumstances, so employers should review their situation with their own legal counsel, ERISA attorney, CPA or tax advisor.