Oct 13, 2010

Update on Health Care Reform: Interim Relief from W-2 Reporting Obligations and DOL Guidance on Retiree-Only Plans

IRS Notice 2010-69 Provides Interim Relief from W-2 Reporting Obligations

Under the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (together, the “Health Care Reform Legislation”), employers are required to report the aggregate cost of employer-sponsored health insurance coverage on employees’ Forms W-2 for tax years beginning on or after January 1, 2011. The Internal Revenue Service recently released Notice 2010-69 which provides interim relief from this reporting requirement. Specifically, this Notice gives employers additional time to prepare their payroll systems and procedures to comply with this requirement by providing that reporting the cost of coverage is voluntary for Forms W-2 issued for the 2011 tax year.

Employers choosing to take advantage of this interim relief will not be treated as having failed to meet the Internal Revenue Code’s wage and tax statement reporting requirements, nor will they be subject to penalties. Additionally, the IRS has released a draft Form W-2 for 2011 that includes the codes employers may use to report the cost of coverage if they choose to do so for the 2011 tax year.

DOL Guidance Addresses Retiree-Only Health Plans

The Department of Labor (“DOL”) has released two Frequently Asked Questions (“FAQs”) regarding the impact of the Health Care Reform Legislation’s group market reforms on retiree-only health plans. Specifically, the FAQs confirm that (1) group health plans with “less than two participants who are current employees” are exempt from the group market reforms under the Health Care Reform Legislation, and (2) plans covering only retirees and current employees on long-term disability will be treated as meeting this exemption until further guidance is issued.

For more information on theses issues and the Health Care Reform Legislation, please contact your SGR Executive Compensation and Employee Benefits counsel.


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