So, the IRS has announced that they will require employers to report the cost of coverage under an employer-sponsored group health plan on the 2012 W-2 form, generating the big question for the early part of the year:”How does MAS 90 do that?” As a matter of fact, one client was so concerned that he sent me the IRS documents 6051(a)(14), 9002, Public Law 111-148, and 106(c)(2) and 125 – for my reading pleasure, I’ll assume. He followed up with a phone call or three – even after I explained how the amounts were to be tracked for printing at year end.
The first step in collecting and reporting these amounts on the W-2 is to be sure that you installed the 2011 Interim Release Download (IRD), which is still available on the Sage Customer Portal. With this update, W-2 Form Printing and Deduction Code Maintenance have been modified according to the IRS 2011 Instructions for Forms W-2 and W-3 to allow for the following new Box 12 codes:
- DD – Cost of employer-sponsored health coverage
- EE – Designated Roth contributions under a governmental section 457(b) plan
Once you have confirmed that you have installed the IRD (quickest way to check – open PR Deduction Code Maintenance and attempt to place a DD in the Box 12 Code field; if it doesn’t work, you need to install), then perform the following tasks that will enable MAS 90 to collect and report the data.
Create an Employer Contribution Deduction:
- Open Payroll > Setup > Deduction Code Maintenance
- Enter a new deduction code
- Form the Deduction Type drop-down menu, select Employer Contribution
- IF applicable, enter DD in the Box 12 Code field.
- Enter or select the remaining applicable fields and click Accept.
Assign the Employer Contribution Code to Employees:
- Open Payroll > Main > Employee Maintenance
- Select the applicable Employee
- Click the Deductions button
- Select the Deduction Code that you created above
- Enter the per-payroll contribution amount in the Ded Rat field and click OK. Note: If adding these amounts during or at the end of the year, make sure to populate the Ded. Y-T-D field with the year to date contribution amount.
- Click Accept – twice
- Repeat Steps 3-6 for all applicable employees
To Display the Amount on the W-2 Form:
- Open Payroll > Period End > W2 Form Printing
- Enter the DD in the Box 12 Codes field
- Select the applicable W2 Form to print
- Click the ‘Form’ button and verify on the Details tab that Box 12 is set at ‘Y’ (yes) to print the data
- Print your forms
Some disclaimers that I picked up in conversations with Sage support regarding this process:
- It is up to the employer to identify, based on the applicable IRS documentation, what they are required to report. Sage is not responsible for identifying reportable costs.
- The Employer is responsible to determine the Accrual and Expense posting accounts. Check with your accountant if unsure which accounts you should use.
- If the employee changes plans during the year, simly adjust the Deductions in Employee Maintenance, adjusting the per-payroll contribution or entering a new Deduction Code.
Okay – that’s what I know about reporting Employee-sponsored Health Care Benefits. If you’re still confused after reading this, here’s where to find your answers: www.irs.gov.