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Answering Employee Questions: Health Care Reform and W-2’s

Here's how employers can prepare for questions from employees regarding changes to their W2 forms as part of health care reform.

Image courtesy of Vichaya Kiatying-Angsulee / FreeDigitalPhotos.net

As employees start to pay attention to their W-2 forms this year, they may notice a new line item that will generate questions for the Human Resources department. That new line is the total cost of employer-sponsored group health plan coverage.

The requirement to display that figure comes from health care reform laws.

To help employers prepare for conversations regarding this figure, here are a few common questions (with answers) that you may receive.

What is the Purpose of this Number?

The purpose of displaying this figure is to educate employees regarding how much their health coverage costs.

Does This Affect My Taxes?

The inclusion of health care coverage information on W-2 Forms does not change the rules for taxable income. It does not affect the tax exclusion for amounts paid for medical care or coverage.

The IRS has stated that this reporting is for informational purposes only. It is specifically designed to show employees the value of their health care benefits so they can be better informed consumers.

Is There Anything I Need to Do?

This reporting requirement does not impose any new obligations on employees. Employees should review the information to get a better understanding of the total cost of their health benefits. However, they do not need to take any additional action.

Turning this Conversation into an Opportunity

While this reporting requirement may mean that Human Resources will need to spend extra time dealing with these types of questions, it can become a positive opportunity as an employer.

Many employees may be somewhat shocked to see a dollar figure associated to the benefits that that the company is providing. Highlighting this may build appreciation, satisfaction, and loyalty.

Also, this moment can be used to encourage employees to take advantage of other Benefit-related programs. This may include workplace wellness initiatives or other voluntary programs.

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Posted in: Benefits and Insurance, Human Resources

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