Don’t overlook coordinating ACA Form 1095 and W-2 tax filings

Don’t overlook coordinating  ACA Form 1095 and W-2 tax filings

Form W-2 Box 12-Code DD is often a forgotten aspect of an employer’s health plan compliance reporting.

Remember, under the ACA Employers are required to provide employees with two reports about their health plan offering in a Tax Year.

  • One is the 1095C form that provides information on the offer of coverage by month, and the second is
  • The value of health coverage in Box 12 Code DD of the employee W-2.

These Reports -1095 and W2_Box12 need to be in Sync!

Why? They are both tax filings and as such should be treated with the diligence any accounting-based tax filing requires.  If the results don’t match you essentially are signaling to the IRS that there may be a discrepancy in the filing!

As an employer it’s important to understand that all this data is being collected annually and aggregated by the IRS for compliance enforcement. The health plan data provided on Forms 1094C/1095C, Form W-2 Box 12-Code DD and your health plan’s Form 5500 is all related to the same activity, an employer sponsoring a qualified health plan. The values and activities represented in the data should always be in synch and provide a true representation of the health plan for that tax year.

Employers that are subject to this requirement should report the value of the health care coverage in Box 12 of the Form W-2, with Code DD to identify the amount. There is no reporting on the Form W-3 of the total of these amounts for all the employer’s employees. The amount reported is the total value and includes both the employer and employee contributions to the health plan. The amount must include the value of the Medical Plan. It does not require inclusion of other plans such as Dental or Vision. Here’s a link to a table issued by the IRS with details on what should be included.

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