As the tax season approaches, many citizens getting their W-2 forms from their employer will notice an addition added to the W-2 form indicating whether they have health insurance or not.
Employers are now beginning to be required to add the information as mandated by President Obama’s healthcare law, the Affordable Care Act or some have termed it, Obamacare, a health care plan that most Americans opposed, that will now allow the federal government to track you, the employee, to have health insurance or be fined.
In Box 12b, the code DD was added along with how much your employer has contributed to your individual health care needs.
According the IRS website:
“The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan. To allow employers more time to update their payroll systems, Notice 2010-69, issued in fall 2010, made this requirement optional for all employers in 2011.
IRS Notice 2011-28 provided further relief by making this requirement optional for certain smaller employers for 2012 Forms W-2 (meaning the Forms W-2 for calendar year 2012 generally furnished to employees in 2013). Notice 2012-9, issued in January 2012, restates and clarifies guidance in Notice 2011-28. It provides guidance for employers that are subject to this requirement for the 2012 Forms W-2 and those that choose to voluntarily comply with it for either 2011 or 2012.”
All employers that provide "applicable employer-sponsored coverage" under a group health plan are subject to the reporting requirement. This includes federal, state and local government entities (except with respect to plans maintained primarily for members of the military and their families), churches and other religious organizations, and employers that are not subject to the COBRA continuation coverage requirements, but does not include federally recognized Indian tribal governments or, until further guidance, any tribally chartered corporation wholly owned by a federally recognized Indian tribal government.”
The reasons behind the new requirement, as the government has said, you can now be educated on how much your employer pays for your health insurance and if you do not have insurance, they will penalize you for not having coverage. Additionally, the new reporting requirements will help identify those taxpayers who will be subjected to the so-called Cadillac tax on high-dollar insurance plans, which will take effect in 2018.
In other words, have a superb health plan; you will be taxed more for having it.
Employers refusing to report such data on W-2 statements are subject to a maximum penalty of $100 per return ($200 per W-2 for the IRS and employee statements).
With this new government intrusion into individual lives regarding their health care, the CBO recently stated that the Internal Revenue Service (IRS) assumed that under Obamacare the cheapest health insurance plan available in 2016 for a family would cost $20,000 for the year.
The CBO report also casts assumptions that many employers will reduce or eliminate health care coverage benefits for employees, forcing those employees to accept the government’s health care plan.