January 1 Minimum Wage & W-2 Health Insurance Reporting Changes

The California minimum wage increases  on January 1, and W-2 reporting requirements for 2015 have changed for employers who issued  250 or more W-2’s for 2014.

New California Minimum Wage

Effective January 1, 2016, the California minimum wage will increase from $9.00 per hour to $10.00 per hour.

W-2 Health Insurance Reporting

The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan on the employees’ Form W-2 in Box 12 with Code DD. The health care amounts reported on the W-2 forms are strictly informational and not taxable to the employee.

The cost of the coverage to be reported includes both the portion of the cost paid by the employer and the portion of the cost paid by the employee, regardless of whether the employee paid for the cost through pre-tax or after-tax contributions. Additionally, the IRS requires that the cost of coverage be reported for the calendar year.

At the website link below, the IRS has provided a chart which illustrates the types of coverage that employers must report on the W-2 forms.

https://www.irs.gov/Affordable-Care-Act/Form-W-2-Reporting-of-Employer-Sponsored-Health-Coverage

The IRS has provided relief from the reporting requirement for small employers. Employers who issued fewer than 250 W-2’s in the prior year are exempt from the health insurance reporting requirement.

This reporting relief applies until the IRS issues additional guidance.

As always, if you have any questions, please call us at 559.924.1225.