Special process in the W-2 Reporting of Employer-sponsored Health Coverage
The Affordable Care Act requires employers to report the value of coverage under an employer-sponsored group health plan on Form W-2 box 12 code DD. Employers are required to report this on the 2016 Form W-2 if they filed 250 or more W-2s per FEIN in 2015. It is optional for all other employers until further notice.
To report the Employer-sponsored Health Coverage in NetSuite, follow the steps below:
1. Create two Earning: Addition items by navigating to List > Employees > Payroll Items > New.
• 1st Earning: Addition:
PayCode = Cost of Employer-Sponsored Health Coverage
Amount/Rate – should be positive
• 2nd Earning: Addition:
PayCode = Cost of Employer-Sponsored Health Coverage (Offset)
Amount/Rate – should be negative
2. Save and Edit the payroll items above and put a check on the Apply box to include it on the employee record's Earning items.
3. Perform an update on the payroll information via Setup > Payroll > Update Payroll Information. Put a check on Agree and click on Commit Updates.
a. Use the same Expense account on the two payroll items.
b. This reporting is informational only; it does not change the taxability of the benefits.
c. Refer to IRS publication on Form W-2 Reporting of Employer-Sponsored Health Coverage: http://www.irs.gov/uac/Form-W-2-Reporting-of-Employer-Sponsored-Health-Coverage
Form W-2 Reporting of Employer-Sponsored Health Coverage
Coverage Type Form W-2, Box 12, Code DD
Report Do Not Report Optional
Major medical X
Dental or vision plan not integrated into another medical or health plan X
Dental or vision plan which gives the choice of declining or electing and paying an additional premium X
Health Flexible Spending Arrangement (FSA) funded solely by salary-reduction amounts X
Health FSA value for the plan year in excess of employee's cafeteria plan salary reductions for all qualified benefits X
Health Reimbursement Arrangement (HRA) contributions X
Health Savings Arrangement (HSA) contributions (employer or employee) X
Archer Medical Savings Account (Archer MSA) contributions (employer or employee) X
Hospital indemnity or specified illness (insured or self-funded), paid on after-tax basis X
Hospital indemnity or specified illness (insured or self-funded), paid through salary reduction (pre-tax) or by employer X
Employee Assistance Plan (EAP) providing applicable employer-sponsored healthcare coverage Required if employer charges a COBRA premium Optional if employer does not charge a COBRA premium
On-site medical clinics providing applicable employer-sponsored healthcare coverage Required if employer charges a COBRA premium Optional if employer does not charge a COBRA premium
Wellness programs providing applicable employer-sponsored healthcare coverage Required if employer charges a COBRA premium Optional if employer does not charge a COBRA premium
Multi-employer plans X
Domestic partner coverage included in gross income X
Governmental plans providing coverage primarily for members of the military and their families X
Federally recognized Indian tribal government plans and plans of tribally charted corporations wholly owned by a federally recognized Indian tribal government X
Self-funded plans not subject to Federal COBRA X
Accident or disability income X
Long-term care X
Liability insurance X
Supplemental liability insurance X
Workers' compensation X
Automobile medical payment insurance X
Credit-only insurance X
Excess reimbursement to highly compensated individual, included in gross income X
Payment/reimbursement of health insurance premiums for 2% shareholder-employee, included in gross income X
Other Situations Report Do Not Report Optional
Employers required to file fewer than 250 Forms W-2 for the preceding calendar year (determined without application of any entity aggregation rules for related employers) X
Forms W-2 furnished to employees who terminate before the end of a calendar year and request, in writing, a Form W-2 before the end of that year X
Forms W-2 provided by third-party sick-pay provider to employees of other employers