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Small Business Employee Benefits and HR Blog

Health Reimbursement Arrangements (HRAs) and Annual W-2 Reporting

hra w2As part of the Affordable Care Act (ACA), employers are required to report the cost of health benefits coverage under an employer-sponsored group health plan. 

Last week, the IRS issued a notice confirming that employers are not required to include the cost of coverage under a Health Reimbursement Arrangement (HRA) on employee W-2s.  If the only coverage provided to an employee is an HRA, the employer is not required to report any amount on the Form W-2 for that employee. 

According to Notice 2012-9, the IRS is granting permanent relief to employers that sponsor HRAs:

"Q-18:  Is the cost of coverage under a Health Reimbursement Arrangement (HRA) required to be included in the aggregate reportable cost reported on Form W-2? 

A-18:  No.  An employer is not required to include the cost of coverage under an HRA in determining the aggregate reportable cost.  If the only applicable employer-sponsored coverage provided to an employee is an HRA, the employer is not required to report any amount under §6051(a)(14) on the Form W-2 for that employee."

Click here to read the full notice.

The Comprehensive Guide to the Small Business HRA

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