The IRS has recently posted a short video on YouTube called “Health Care: W-2 Health Insurance Reporting.” The video is less than two minutes and covers some of the key points in Notice 2011-28, 2011-16 IRB 656. Reporting of employer-sponsored health insurance coverage on Form W-2 is optional for all employers in the 2011 tax year. The reporting requirement continues to be optional for “smaller employers” in the 2012 tax year. A “smaller employer” is an employer that filed less than 250 W-2 forms in the 2011 tax year. The IRS made the reporting requirement optional to allow employers more time to make changes to their payroll systems.
The IRS also notes on the video that the new Form W-2 reporting requirements have no tax ramifications. The purpose of the reporting requirement is to provide useful and comparable consumer information to employees on the cost of their health insurance coverage. The reporting requirement does not cause excludable employer-provided health insurance coverage to become taxable.