Exchange – Public

Healthcare Marketplace

Boxed in by Box 12 on the W-2

Another update from the Jungle…

unnamedMaryann handles payroll questions for her employer.  She and her coworkers have been scrambling for a couple of years to ensure they comply with the Affordable Care Act (ACA).  Last year was all about finding a software program that would allow the company to track the hours of its temporary employees.

This year, Maryann is looking at box 12 on the W-2. That’s the box where employers need to plug in the cost of the medical plan for the employee.  Filling in this information is mandatory only for employers who filed at least 250 W-2’s in the previous tax year, meaning in 2013.  Maryann’s company filed 170 W-2’s in 2013, so they aren’t required to complete box 12 for the 2014 tax year.

She knows that this January her company will issue 200 W-2’s covering the 2014 tax year.  She thinks that number will rise to 250 during 2015.  Maryann wants to get a head start on figuring out box 12 after some of the past fiascos in trying to comply with the ACA.

What should Maryann consider?

  1. Maryann knows that the “cost” or “value” of health coverage refers to the premium paid for medical coverage in the health plan, known as “major medical”. She needs to verify what other costs, such as FSA contributions and dental and vision premiums, may need to be included.
  2. Maryann can consult her company’s CPA firm for assistance on completing box 12.
  3. Maryann can do some research in the ACA section of the IRS website during her spare time.

Update:  According to the IRS website, no new guidance has been issued in the past year. As a result, reporting the cost of the employee medical plan in Box 12 is required only for employers who filed 250 W-2’s in the previous tax year.  Employers who filed less than 250 W-2’s in the previous tax year may voluntarily report the medical plan cost in Box 12.

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Doing the Right Thing under the ACA.

Another update from the HR jungle….

Cindy owns a small business that has 6 employees. She would love to offer health insurance to her employees but has found it too expensive in the past. Instead, she raised wages slightly and encouraged her employees to buy individual coverage.

When Cindy first heard about the Affordable Care Act (ACA or Obamacare) she was excited about the possibilities. Early reports were that small employers like her company might finally be able to afford a group health plan. The Small Business Health Option Program (SHOP) would have standardized plans, making it easier to compare coverage. The SHOP was also supposed to allow small employers to offer more than one health plan option to employees.

Alas, the SHOP is part of the Healthcare Exchange or Marketplace. The roll out of the Individual Exchange was such a mess that all the most attractive features of the SHOP were delayed. Another year has gone by and open enrollment in (and outside) the Exchange will soon start. Cindy is pondering her choices.

What options are available to Cindy?

1. She could work with her insurance agent to apply for a group health plan via the SHOP, even though the coverage options are limited.
2. She could work with her insurance agent to apply for a group health plan outside the SHOP where there are more coverage options available from more insurers.
3. She could continue doing what she currently does, which is to increase her employees’ pay and encourage them to obtain individual coverage.

Is your company struggling to understand how the ACA will affect the employee group health plan? Corporate Compliance Risk Advisor can help you grasp the basics of the ACA and how it affects an employer of your company’s size.

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