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The New W-2 form

New W-2 with Employer Paid Health Coverage Information

I just received a first draft copy of the new W-2 where the 2010 health care bill requires health insurance coverage to be posted. I will quote from the instructions. "Cost of employer-sponsored health coverage (if provided by the employer). The reporting in Box 12, using Code DD, of the employer-sponsored health coverage is for information only. The amount reported with New W-2 with Employer Paid Health Coverage Information explained. Code DD is not taxable." Thus, the entry on the W-2, if the employer properly uses Code DD in Box 12, assures the worker that the amount the employer paid is not taxable to the employee. The original instructions, which were removed from the IRS website a few months ago, read that the information was not taxable but the requirement of showing the information on W-2s for three years allows the government to know who has coverage paid by the employer. That, in 2014, the employers who do not have employer paid health insurance coverage for their employees will be fined on a monthly basis until they do cover their employees.

The other option, in 2014, is for the state run insurance pools to kick in. That instruction is gone and now it is replaced with this new "it is for information purposes only". It seems the Treasury Dept believes that the employee wants to know how much the employer is paying on their behalf for this tax-free fringe benefit. There is also a rule that goes along with this W-2 entry. The employers are supposed to provide to the IRS which employees are covered by the health insurance, with names, addresses, social security numbers and dates of birth of all family members who are covered by the insurance that is provided to the employee. The forms for that have not yet been printed but they should be out in 2011. This goes to the government so they will have a data base ready for the 2014 forced health insurance coverage. If you have any comments or questions, please post them below.

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Comment by Goober on October 17, 2010 at 4:55pm: So... what you are saying then.. is if you are part of a self organized community of like minded folks... they are the ones who gets screwed. Hmmm making me wonder.

Comment by Patriot Eagle on October 17, 2010 at 6:53am: Goober, that is a good question. The IRS expects you to file when you receive a 1099MISC for services rendered. With no 1099MISC in hand, bartering stays under the radar unless the other party to the barter gets into tax trouble and they spill the beans. The IRS does not have a good method of tracking the underground economy. They expect (wish) the public is honest enough to show all trades and pay tax on them. That is against human nature, for the most part, from what I have seen.

Comment by Goober on October 17, 2010 at 5:30am: What about people who are no longer working? How do they track us. I will not be filing a tax form if I am not working. If I have no employer there will be no way to track me. Correct??? How are they going to deal with al of the folks like us?

Comment by Patriot Eagle on October 16, 2010 at 5:37pm: Theresa, I know. I do some MA tax returns. I guess the feds want everyone in their data base. Perhaps there is some extra money in it for the feds (or extra control) that is above and beyond what your state already does.

Comment by Patriot Eagle on October 16, 2010 at 5:34pm: Commonsensible, the insurance industry data does not match everything in the same manner as the feds are looking at it now. This new method matches the actual employer who will be potentially fined for non-compliance. It also allows the feds to know the dependents who are covered by matching them to the employee. This new method puts the feds in direct access to exactly what they want to monitor without going to the insurance industry at all. Plus the new data base system creates thousands of new federal unionized employees.

Comment by Theresa Stone on October 16, 2010 at 2:19pm: Since I live in Massachusetts that already has mandated health insurance with a "Pool" which set of tax regulations will be accurate to go by? The state that already has the mandate or the Feds that is supposedly only looking for information? The state already has a pool called the Commonwealth Connector (which BTW is a freaking joke)Our employer contribution is already listed and we get a special form to file with our state taxes.

Comment by Commonsensible on October 16, 2010 at 1:31pm: Thanks for the info. I am sort of surprised that they don't already have this informatin available to them since they spit out all these number all the time. I've always wondered how they were tracking who has insurance and who does not (?) Another new database was necessary (hmmm). Couldn't they already get that information from the insurance companies themselves(?) More government invading our lives and taking control!

Comment by Patriot Eagle on October 16, 2010 at 11:12am: Rage, that is correct, they will collect data for three years and then slam the employers for not covering employees. Then the employers will have to way the cost of the fine versus buying into the state run insurance pools. It will be interesting to see how this works out because some insurance companies will opt out of coverage in certain states, leaving less choice for everyone

Comment by RageforOrder on October 16, 2010 at 11:04am: Thanks for the info PE1......so I got till 2014.At least the gov allowed the people to prepare.