You may have noticed a new entry on your W-2 for 2012 and you may be surprised at how large the number is. That is the amount of your and your employer’s cost for your health benefits. Right now it’s there for information purposes only. DO NOT REPORT IT AS INCOME when you file your taxes.
Remember, the portion of those dollars that is not deducted from your pay each pay period represents tax-free income because your employer is paying the bill on your behalf. We used to call that part of your hidden paycheck. That amount paid by your employer represents a major revenue loss to the federal government. In addition, many workers enjoy additional benefits because the portion they pay is with pre-tax dollars and thus the government is picking up 15% or more (depending on your tax bracket) of your cost for health insurance.
These benefits are not available to individuals who do not have employer based health care coverage. Given the budget and deficit issues facing the Country, it is not hard to figure out where all this is headed. At some point at least a portion of the value of employer paid health is likely to become taxable income.
Below is a summary of some of the rules the IRS has released for this reporting.
Related articles
- W-2 forms now listing health care costs (sfgate.com)
- NY Times: For First Time, Workers See Total Cost of Their Health Insurance on W-2 (taxprof.typepad.com)
- Obama-Care Requires W2s List Health Plan Cost (sweetness-light.com)
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