Reporting the Cost of Employer-Sponsored Health Care Coverage

W-2 Reporting Instructions for

9.29.2020 SEBB Organizations

Reporting the Cost of Employer-Sponsored Health Care Coverage on

IRS Form W-2

For Calendar Year 2021 (W-2s issued in January 2022)

Federal Requirement for Reporting on W-2’s

Federal law requires reporting of employer-sponsored medical, dental, and vision costs on employee W-

2 Forms. (HCA relied on IRS instructions from Form W-2 (Cat. No. 25979S) and Interim Relief Instruction

Notice 2011-28 in preparing these instructions and examples.)

Employers are required to determine and report three numbers:

1. Employee contributions toward medical, dental, and vision insurance premiums.

2. The cost of employer-sponsored medical, dental, and vision care.

3. The cost of employer contributions and optional employee contributions through payroll deduction

to a Health Savings Account (HSA) (if employee is enrolled in a CDHP).

Numbers Provided by the SEBB Program

The SEBB Program, as the plan administrator, is providing applicable rates for employers to carry-out

their reporting responsibility. See the attached table entitled “Employer Reporting for the Cost of

Employer-Sponsored Health Coverage on IRS Form W-2.”

Calculating Numbers for W-2 Reporting

1. Employee Contribution – Calculating and reporting the employee contribution for medical, dental,

and vision insurance premiums:

a. Identify the employee’s tier (i.e., subscriber only, subscriber and spouse, subscriber and

child(ren), or employee, spouse, and child(ren)).

b. Identify employee’s medical, dental, and vision plans.

c. Identify employee’s pre-tax deductions.

d. Identify employee’s applied premium surcharges for tobacco use and spouse or state-registered

domestic partner, if applicable.

e. Sum the pre-tax “Employee Contribution” for medical and report in box 14 of the W-2.

• If the employee waived medical, report zero.

• Consider each month separately to account for any mid-year changes in tier, plan or

premium surcharges. Then calculate the total for the tax year.

SEBB Organizations

W-2 Reporting Instructions for

9.29.2020 SEBB Organizations

2. Employer Contribution – Calculating and reporting the cost of employer-sponsored medical, dental,

and vision care:

a. Identify the employee’s tier (i.e., subscriber only, subscriber and spouse, subscriber and

child(ren), or employee, spouse, and child(ren)).

b. Identify the employee’s medical, dental, and vision plans.

c. Sum the “Cost of Employer-Sponsored Medical Care”, “Dental Care”, and “Vision Care” and

report in box 12 of the W-2 using code DD.

• If the employee waived medical, report dental and vision.

• Consider each month separately to account for any mid-year changes in tier or plan. Then

calculate the total for the tax year.

• Include the cost of any non-tax qualified dependents medical insurance and state-registered

domestic partner premium surcharges as part of the aggregate cost of health insurance.

Report as defined in the guidance provided in the Tax Issues for Non-Qualified Tax

dependents on the Rates page of the Benefits-Admins

website.

3. Health Savings Account – Calculating and reporting the Health Savings Account (HSA) contribution

of the employer and the employee:

a. Sum the “Cost of Employer-Paid Health Savings Account” plus any optional payroll deductions

toward the HSA made by the employee plus the $125 wellness incentive, if the employee

received the incentive for 2021, and include in box 12 using code W.

• Include both pre- and post-tax employee discretionary payroll deductions to the HSA.

Examples of Calculating and Reporting Employer-Sponsored Health Care Cost

Examples of calculating the employer-sponsored health care cost (#2 above) and cost of employer-paid

and employer contributions to an HSA through payroll deduction (#3 above)

Example A – (see guidance letters A and A1 on the rate chart):

Single employee (subscriber) enrolled in Kaiser NW 2 for medical, Uniform Dental Plan for dental,

EyeMed for vision and incurring the tobacco use premium surcharge.

Kaiser NW 2 $ 612.42 (see A on rates chart)

Uniform Dental Plan + $ 47.63 (see A1 on rates chart)

EyeMed + $ 5.96 (see A2 on rates chart

Tobacco Use Premium Surcharge +

$ 25.00

Total cost of health care per month $ 691.01

Multiply total cost of health care per month by the number of months the employee was enrolled in the

plans for that tax year. Report the total in box 12 on the W-2 form using code DD.

W-2 Reporting Instructions for

9.29.2020 SEBB Organizations

Example B – (see guidance letters B, B1, B2, and B3 on the rate chart):

Married employee and spouse (subscriber and spouse) are enrolled in UMP high-deductible plan with

HSA for medical, Willamette for dental, and MetLife for vision. In addition, the employee earned the

wellness incentive for 2021.

UMP high-deductible plan with HSA $ 1,175.85 (see B on rates chart)

Willamette + $ 99.80 (see B2 on rates chart)

MetLife +

$ 13.32 (see B3 on rates chart)

Total cost of health care per month $ 1,288.97

Employer Contribution for HSA $ 62.50 (see B1 on rates chart)

Optional HSA Employee Contribution through

payroll deduction

$ xx.xx

Wellness Incentive (if earned for 2021) +

$ 125.00*

Total HSA contribution per month Total

Multiply total cost of health care per month by the number of months the employee was enrolled in the

plans for that tax year. Report the total health care in box 12 on the W-2 form using code DD.

Multiply total HSA contribution per month by the number of months the contributions were made to

the HSA for that tax year , then add the $125 wellness incentive* if the employee earned it. Report the

total HSA contribution in box 12 in the W-2 form using code W.

*The wellness incentive is a onetime deposit of $125; do not multiply the $125 by the number of months

contributions were made.

Example C – (see guidance letter C on the rate chart):

Married employee waived medical and enrolled full family in Uniform Dental Plan and EyeMed vision

plan only.

Uniform Dental Plan + $ 142.89 (see C on rates chart)

EyeMed +

$ 17.88 (see C1 on rates chart)

Total cost of health care per month $ 160.77

Multiply total cost of health care per month by the number of months the employee was enrolled in the

plans for that tax year. Report the total in box 12 on the W-2 form using code DD.

Example D – Employee is not eligible for insurance.

Not eligible for benefits $ 0.00 (Nothing to report on

W-2)