Reporting Employee Cost Information on W-2s is Optional for 2011.

As a part of the Patient Protection and Affordable Care Act (PPACA), employers are required to report the aggregate cost of employer-sponsored coverage on each employee’s W-2. Initially, employers were to begin reporting this information with the 2011 W-2s. However, in an attempt to provide system adjustment time, the IRS has issued Notice 2010-69, which states that employers now have the option to report for 2011; it is no longer a requirement.

In addition, a draft form W-2 has also been issued, which contains cost of coverage codes applicable to employer-sponsored group health plans. Additional guidance about this new reporting requirement is expected from the IRS later this year. The IRS has stressed that reporting is for informational purposes only, to provide employees with increased healthcare cost transparency. Amounts reported are not taxable.

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