Recent Internal Revenue Service guidelines requiring larger employers to report health care costs on the W-2 forms for tax year 2012 will probably confuse workers receiving the information in January, so HEC is suggesting that affected employers provide an explanation along with the W-2.

The federal Patient Protection and Affordable Care Act of 2010 obligates employers who filed 250 or more W-2 forms for the 2011 tax year to report the aggregate cost of group health plan coverage in the W-2 forms that are issued to their employees for tax year 2012, and employees may be concerned that they are being subjected to new tax obligations. Although there is no legal requirement that companies explain the new health cost reporting requirement to employees, a notice may alleviate the number of questions to the HR department about what the extra cost item means on the W-2.