Reporting Employer-Sponsored Health Care Benefits on the 2012 W-2 Form

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:

  1. Open Payroll > Setup > Deduction Code Maintenance
  2. Enter a new deduction code
  3. Form the Deduction Type drop-down menu, select Employer Contribution
  4. IF applicable, enter DD in the Box 12 Code field.
  5. Enter or select the remaining applicable fields and click Accept.

Assign the Employer Contribution Code to Employees:

  1. Open Payroll > Main > Employee Maintenance
  2. Select the applicable Employee
  3. Click the Deductions button
  4. Select the Deduction Code that you created above
  5. 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.
  6. Click Accept – twice
  7. Repeat Steps 3-6 for all applicable employees

To Display the Amount on the W-2 Form:

  1. Open Payroll > Period End > W2 Form Printing
  2. Enter the DD in the Box 12 Codes field
  3. Select the applicable W2 Form to print
  4. Click the ‘Form’ button and verify on the Details tab that Box 12 is set at ‘Y’ (yes) to print the data
  5. 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.

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One Response to Reporting Employer-Sponsored Health Care Benefits on the 2012 W-2 Form

  1. Pingback: Getting Ready for 2012 Year-End with Sage 100 ERP « Another Day in Paradise

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