Employee Health Premiums Won't Be Taxable

The Internal Revenue Service, Oct. 12, issued a draft Form W-2 for 2011 which includes the codes that employers should use to report the cost of health care coverage, but the White House announced that the new requirement for employers to report the cost of coverage under an employer-sponsored group health plan is being deferred until 2012.

The White House also stressed this week that the amounts reportable are not taxable and that the reporting is intended to be informational only to provide employees with details about how much their health insurance coverage actually costs.  

“For months, opponents of health reform have falsely claimed that the Affordable Care Act would lead to the taxation of health care benefits,” said Stephanie Cutter, President Obama’s assistant for special projects, on the White House blog. “The claim wasn’t true when the rumor first surfaced, it isn’t true today and it won’t be true tomorrow.”

According to a statement from the Treasury Department and IRS, the Administration has determined that employers may need time to make changes to their payroll systems or procedures in preparation for compliance with the new reporting requirement. The IRS will publish guidance on the new requirement later this year. 

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