Does W-2 Reporting mean that the value of health insurance will be taxable to employees?
The Health Care Reform Law includes a provision that all employers must report the total value of employer-sponsored insurance coverage, excluding salary reduction contributions under medical flexible spending accounts (FSAs) contributions to MSA and HSA plans, and stand-alone dental and vision coverage, on employees’ Forms W-2. In October 2010, the IRS announced that it will defer the original start date of the requirement, making it optional for tax year 2011 and mandatory for larger employers filing 250 or more Forms W-2 beginning with the 2012 tax year. There is much speculation in the public and political arena about how this information will affect taxable income and corresponding taxes paid by employers and employees. Paychex closely monitors Health Care Reform developments, and currently, there is no indication or reason to believe that this reporting requirement is an indicator that insurance coverage will be taxed simply because it is reportable on Form W-2. Certain employer
