As you know, PPACA requires employers to report the cost of every employee's coverage under an employer-sponsored group health plan. Although slated to start in tax year 2011, this was made optional for all employers when IRS Notice 2010-69 was issued last fall.

Further delays and changes to this requirement last month have provided more relief for certain employers. The IRS issued Notice 2011-28 on March 29 which mandated optional reporting for small employers for the 2012 tax year, and therefore is not required until tax year 2013. Additionally, the notice provides guidance on what coverage and contributions should be included and excluded, examples of various methods of calculating the cost of coverage, and addresses calculation issues for reporting.

The highlights of the new guidance are as follows:

• Small employers are defined as employers that are required to file fewer than 250 W‐2s for 2011. Small employers will not be required to report the cost of employer‐provided health coverage on any forms required to be furnished to employees until January 2014 (for tax year 2013 Form W‐2).
• Larger employers are required to start reporting the cost of employer‐sponsored group health coverage on the 2012 Form W‐2, which employers must provide in January 2013.
• For all employers, aggregate cost is determined under rules similar to the rules for determining the "applicable premium" for purposes of COBRA continuation coverage.
• For all employers, the cost of coverage is determined on a monthly basis, and the annual cost is calculated by aggregating the monthly costs. This automatically takes into account changes in the cost of coverage or in the benefit option elected during the year.
• Employers are not required to issue W‐2s to report the cost of coverage provided to retirees or to other former employees who do not receive wages or salary in the current tax year and for whom the employer is not otherwise required to issue W‐2s.
• If future guidance is more restrictive, it will not be applicable earlier than Jan. 1 of the calendar year beginning at least six months after the date the future guidance is issued.

As always, the requirement is for informational purposes only and does not affect the taxability of the coverage. If you are not a "small employer," the delayed effective date does not apply, and you will need to begin reporting for the 2012 tax year.

Click here to read Notice 2011-28.