December 2, 2015 by Tony Novak
All employers, regardless of their legal form or number of employees, that provide Health Reimbursement Arrangements (HRA), Flexible Spending Arrangements (FSA), Health Spending Allowance plans (not to be confused with Health Savings Accounts that do not require these filings) or other self-insured health coverage must annually file information returns for individuals they cover for the year 2015 under new rules included as part of the Affordable Care Act. The new filing requirement is part of Section 6055 of the Internal Revenue Code.
Because this is the first year that filings are required, many business owners and tax professionals may be unfamiliar with the procedure. Business owners should take time to become familiar with the basic requirements and penalties for not reporting employee health benefits. Tax advisers should be familiar with the penalty relief provisions for the forst year of reporting under the new rule.
The first return filings are due to be filed in the spring of 2016 for the business year 2015 when the business prepares its W2 forms for employees.
The cost of these health care benefits will be reported in box 12 of the Form W-2, with Code DD to identify the amount. In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee. In the case of a health FSA, the amount reported should not include the amount of any salary reduction contributions.
For more information, see the Affordable Care Act Tax Provisions for Small Employers page on IRS.gov/aca.
My article “Taxation of Health Insurance” provides more tax information on other types of insured small business health plans