Note: This should not be taken as tax or legal advice.

NO.  Nothing in the new legislation removes the tax exclusion for employer-sponsored health insurance.

Earlier this year, we discussed how health care reform affects annual W-2 reporting. Beginning in the 2011 tax year, employers will be required to report the cost of employer-sponsored coverage on an employee's W-2. 

Many insurance agents and employers have misinterpreted this requirement. To help clarify this, the Internal Revenue Service (IRS) recently released the following explanation:

"Starting in tax year 2011, the Affordable Care Act requires employers to report the value of the health insurance coverage they provide employees on each employee's annual Form W-2. This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludible from an employee's income and it is not taxable."

Companies that sponsor a welfare benefit plan and have over 100 participants at the beginning or end of the plan year are required to file a Form 5500 Annual Report for health flexible spending accounts and health reimbursement arrangements if the plan had 100 or more participants during the plan year.

The Department of Labor (DOL) has transitioned to a new online system that requires employers to file Form 5500 electronically. Employer clients will continue have real-time access to all the necessary for Form 5500.

Visit the DOL's website for more information.

An HRA (Health Reimbursement Arrangement) is an ERISA plan. Thus, the employer must file a Form 5500 annual if the plan had 100 or more participants in the plan year.

A POP (Premium only Plan) is a Section 125 Cafeteria Plan. Internal Revenue Service (IRS) Notice 2002-24 suspended the Form 5500 filing requirement for cafeteria plans. However, if the plan provides ERISA benefits, it is a welfare benefit plan and the employer must file a Form 5500 annual if the plan had 100 or more participants in the plan year.

The Form 5500 Series is an important compliance, research, and disclosure tool for the Department of Labor, a disclosure document for plan participants and beneficiaries, and a source of information and data for use by other Federal agencies, Congress, and the private sector in assessing employee benefit, tax, and economic trends and policies. The Form 5500 Series is part of ERISA's overall reporting and disclosure framework, which is intended to assure that employee benefit plans are operated and managed in accordance with certain prescribed standards and that participants and beneficiaries, as well as regulators, are provided or have access to sufficient information to protect the rights and benefits of participants and beneficiaries under employee benefit plans.

Visit the DOL's website for more information on Form 5500.

It is important to file the Form 5500 by the due date. Failure to do so can result in fines of $1,100 plus per day the return is late.