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IRS delays smaller employer deadline to report insurance costs on W-2s

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WASHINGTON—The Internal Revenue Service said Tuesday that it will give smaller employers even more time to comply with a health care reform law requirement that employers report the cost of coverage on employees' W-2 wage and income statements.

In addition, the IRS also clarified that the reporting requirement does not apply to retirees receiving health care coverage.

Under the reform law, employers were required to provide health care cost information on 2011 W-2 statements that are distributed to employees in 2012.

But last year, the IRS waived that requirement for 2011 and said the health care cost reporting requirement would apply to 2012 W-2s, which are issued in 2013.

Under Tuesday's guidance, detailed in Notice 2011-28, employers that issue fewer than 250 W-2s in 2011 will not be required the cost of coverage on the 2012 W-2s.

Those employers “will not be required to report the cost of health coverage…prior to January 2014. This transition relief will continue until the issuance of further guidance,” the IRS said.

In addition, the IRS made clear that employers will not have to issue W-2s to retirees who receive health care coverage but no longer receive wages or salary.

“An employer is not required to issue Form W-2 including the aggregate reportable cost to an individual to whom the employer is not otherwise required to issue a Form W-2,” the IRS said.

The IRS guidance resolves a key question raised by employers with retiree health care plans, said Andy Anderson, a partner with law firm Morgan, Lewis & Bockius L.L.P. in Chicago.