The Affordable Care Act now requires all employers, including nonprofit employers, to report the cost of health insurance coverage for each employee covered under an employer-sponsored group health insurance plan on Form W-2, Wage and Tax Statement (in Box 12, use Code DD). As the instructions to employees on the back of the form explain, the fact that the ACA now requires that employers report the cost of health care coverage on the Form W-2 does NOT mean that the coverage is taxable. This reporting is for informational purposes only, and will provide employees useful and comparable consumer information on the cost of their health care coverage.
NOTE: Small employers filing fewer than 250 W2′s are eligible for transition relief for tax-year 2012 and later, which means that compliance with this requirement is voluntary until the IRS issues final guidance. For more information, contact your nonprofit’s accountant, and/or see IRS guidance.