Health Insurance on W-2

[Bees Knees]

It is interesting to see the cost of health insurance now being reported on the W-2 (box 12, code DD). This is both the employer and employee's portion of the cost of insurance, which we do not have to do anything with.

I just find it interesting to see what other people are paying for health insurance, compared to my own.

[smithtax]

I agree. Sometimes it is quite enlightening.

[Traveling EA]

Health Insurance on W-2's

My wife works at a hospital with about 4,000 employees. There was not anything related to HI on her W-2. Are tax exempt organizations exempt from this requirement? I know employees with less than 250 are exempt, at least for 2012.

[David1980]

Many seem shocked how expensive health insurance is when I explain what they're looking at. Had no idea.

[Gene V]

It is interesting to see the cost of health insurance now being reported on the W-2 (box 12, code DD). This is both the employer and employee's portion of the cost of insurance, which we do not have to do anything with.

I just find it interesting to see what other people are paying for health insurance, compared to my own.

I thought the DD meant it was the employer cost not the employee's portion.

per W-2 instruction

Code DD—Cost of employer-sponsored health
coverage. Use this code to report the cost of
employer-sponsored health coverage. The amount
reported with code DD is not taxable. Additional
reporting guidance, including information about the
transitional reporting rules that apply, is available on the
Affordable Care Act Tax Provisions page of IRS.gov.

[Burke]

I thought the DD meant it was the employer cost not the employee's portion.

Code DD—Cost of employer-sponsored health coverage. Use this code to report the cost of employer-sponsored health coverage. The amount reported with code DD is not taxable. Additional reporting guidance, including information about the transitional reporting rules that apply, is available on the Affordable Care Act Tax Provisions page of IRS.gov.

I did too. The way this is worded I suppose you could interpret it both ways, however. Just had one that was over $12K.

[Traveling EA]

I thought it was both. Since most large employers (more than 250 employees) that are requried to have this also have pretax health insurance. This means, at least to me, that there is a salary reduction and the employer pays 100% of the premium. The salary is reduced by the amount of the employee share, so in effect the employer is paying it all.

[luke]

client spouse

got her W2 from employer (rite aid pharmacy) - her wages = $17,000 her DD health ins = $19,000 !

[taxmom34]

looking at the W2 with DD box 12, is that amount added to box 3 & 5? i have W2 where all three boxes 1, 3 and 5 are the same and my software is questioning why its not added to box 3 & 5

[Traveling EA]

Pretax HE

looking at the W2 with DD box 12, is that amount added to box 3 & 5? i have W2 where all three boxes 1, 3 and 5 are the same and my software is questioning why its not added to box 3 & 5

Health insurance, unless a 2% shareholder, if it is pretax does not show up in 1, 3 or 5.

[David1980]

looking at the W2 with DD box 12, is that amount added to box 3 & 5? i have W2 where all three boxes 1, 3 and 5 are the same and my software is questioning why its not added to box 3 & 5

If I had to guess, the software thinks it's a code "D" not a code "DD". Perhaps it's only looking at the first letter. Sounds like a software issue if so.

[Bees Knees]

I thought the DD meant it was the employer cost not the employee's portion.

per W-2 instruction

Code DD—Cost of employer-sponsored health
coverage. Use this code to report the cost of
employer-sponsored health coverage. The amount
reported with code DD is not taxable. Additional
reporting guidance, including information about the
transitional reporting rules that apply, is available on the
Affordable Care Act Tax Provisions page of IRS.gov.

TTB, What's New In-Depth Edition, page 10-2, second column, second bullet:

• The amount reported for employer-provided health care should include both the portion paid by the employer and the portion paid by the employee...

The citation for that statement is Notice 2011-28 and the IRS website on the W-2 reporting of employer-provided health care.

Note also, the instructions for the W-2, code DD does not say the employer's portion of the cost. It says "the cost of
employer-sponsored health coverage..." There is a difference.

If you go out and buy health insurance on your own, the cost is much greater than if your employer goes out, buys group coverage, and requires you to pay 100% of the cost. Thus, even though an employee may be required to pay a portion of the health insurance, it is still considered to be employer-sponsored coverage.

Note also, that is why former employees sometimes elect to buy health insurance through their former employer under COBRA. Even though the former employee pays 100% of the cost, the cost is less because it is being purchased through an employer sponsored group health plan.

[Burke]

looking at the W2 with DD box 12, is that amount added to box 3 & 5? i have W2 where all three boxes 1, 3 and 5 are the same and my software is questioning why its not added to box 3 & 5

Software has a glitch. DD is not added to anything. It is an information item only.

[Gene V]

Thanks Bees

Makes sense the way you explain it.

[FEDUKE404]

Code DD obviously not a taxable entry

looking at the W2 with DD box 12, is that amount added to box 3 & 5? i have W2 where all three boxes 1, 3 and 5 are the same and my software is questioning why its not added to box 3 & 5

Rather strange. My software has notes that, as for DD coding, it is "not taxable." Could it perhaps think it is code "D" or something else?? Sounds very much like a program glitch and/or an overly cautious error alert system within the software.

BTW: Isn't the real reason for any DD entries to meet the rules for Obamacare reporting that are now in effect and related to calculating "insurance penalties" or whatever such will be starting around 2014 ??

FE