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  • Form w-2 Reporting Requirements for Large Group Employers

    Beginning in 2013, employer groups with more than 250 employees will need to report on Forms W-2 the cost of the group health coverage that they provide to their employees.  This will not apply to the following for the time being:

    • employers issuing fewer than 250 Forms W-2 in the previous year;
    • multiemployer plans;
    • health reimbursement arrangements;
    • stand-alone dental and vision plans (in other words, dental and vision plans that are not otherwise integrated or incorporated into comprehensive medical plans);
    • self-insured plans that are not subject to COBRA or similar Federal requirements; and
    • employers furnishing Forms W-2 mid-year to employees who terminate during that year.

    For a fully-insured plan, the premium charged is the cost of coverage.  For a self-insured plan, the cost of coverage is the COBRA applicable premium.  In calculating this cost, the employer must be sure to comply with the requirements for calculating the COBRA premium provided in the COBRA statute.  If the employer subsidizes the cost of COBRA so that the premium charged to qualified beneficiaries is less than the COBRA applicable premium, the employer may determine the reportable cost based upon a reasonable good faith estimate of the COBRA applicable premium, if such reasonable good faith estimate is used as the basis for determining the subsidized COBRA premium.

     To prepare for this reporting obligation, employers should begin working with their payroll administrators to make sure that their systems are updated by the end of 2011, so that they can track the cost of any coverage provided in 2012 and report it on the Forms W-2 that will be issued in January 2013.

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