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National Restaurant Association - Gov't. offers guidelines for health-care cost reporting

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Gov't. offers guidelines for health-care cost reporting

As restaurant operators grapple with proposed requirements tied to the new health care law, the Internal Revenue Service is offering more information on how to comply with at least one facet of the mandated documentation: the W-2 cost of coverage reporting requirement.

Enacted in 2010, the health care law requires employers to report annually to the IRS each employee's cost of coverage under an employer-sponsored group health plan on his or her W-2 form. This amount includes the portion paid by the employer and employee to the cost of coverage. This requirement is for informational purposes and the value submitted is not taxable for either the employer or employee.

Compliance with this requirement was voluntary for all employers for tax year 2011. Employers who will file less than 250 W-2s for tax year 2012 also are not required to comply yet. However, employers with more than 250 W-2s should track the value of each employee's cost of coverage now so accurate reports can be issued in early 2013. Subsequently, all employers must comply with this reporting requirement for tax year 2013.

"The health care law's reporting requirements are already starting to kick in for some restaurateurs," said Michelle Reinke Neblett, the National Restaurant Association's director of labor and workforce policy. "The IRS has now provided more detailed and clear guidance with a chart that clearly shows what should be considered in the cost of coverage calculation. Restaurateurs should take a close look at this list to understand the types of coverage that must be included."

The agency further stated that certain employers are eligible for transition relief until the IRS issues final guidance for this reporting requirement. The transition relief is applicable to:
1. employers filing less than 250 2012 W-2 forms
2. multi-employer plans
3. health reimbursement arrangements
4. dental and vision plans that either
• are not intergrated into another group health plan or
• give participants the choice of declining the coverage or electing it and paying an additional premium
5. self-insured plans not subject to COBRA continuation coverage or similar requirements
6. employee assistance programs, on-site medical clinics or wellness programs for which the employer does not charge a premium under COBRA continuation coverage or similar requirements; and
7. employers furnishing W-2 forms to employees who terminate before the end of a calendar year and request a W-2 form before the end of that year.
According to the law's current requirements, coverage types that must be reported on the W-2 form include:
• major medical
• health FSA value for the plan year in excess of employee's cafeteria plan salary reductions for all qualified benefits
• hospital indemnity or specified illness (insured or self-funded), paid through salary reduction (pre-tax) or by employer; and
• domestic partner coverage included in gross income

The IRS also stated that employers are not required to issue W-2 forms for retirees, other employees or former employees to whom the employer would not otherwise provide the form.

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