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Small Business Reprieve on Mandatory Health Care Reporting

June 2nd, 2011 by Darci Congrove

Health care reform came in two pieces of legislation, The Patient Protection and Affordability Act (the Original Bill) and the Health Care and Education Affordability Reconciliation Act of 2010 (the Amendment). This legislation included a greatly-expanded requirement for businesses and landlords to file a Form 1099 document with the Internal Revenue Service for purchases of all goods and services exceeding $600 per year, including those payments made to corporations.  Bowing to pressure from business groups worried about an avalanche of paperwork, Congress has recently rescinded the expanded Form 1099 tax reporting requirement.  The tax filing requirement did not directly relate to health care but was intended to help pay for the health care law that is considered one of President Barack Obama’s top legislative achievements.

A second provision of the new law required employers to report the cost of employer-provided health care coverage on employees’ W-2 forms beginning in 2011.  Many businesses have argued that this is also a burdensome compliance requirement.  The IRS recently announced that the requirement for most employers has been delayed to 2012.  Those employers with fewer than 250 employees in 2011 are now exempt from mandatory reporting until 2014 (for 2013 W-2 forms).

Employers of any size may voluntarily report the cost of group health plan coverage beginning in 2011. IRS Notice 2011-28, which can be found at, provides guidance for employers subject to the 2012 W-2 requirement.  The IRS has stressed that the reporting the cost of the health care coverage provided does not mean that the amounts will be taxable.  The requirement is intended to provide employees with greater transparency into overall health care costs.  Skeptics, however, assume that this informational reporting may be the first step toward taxing health care benefits in the future.


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