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Payroll Changes Relating to the Affordable Care Act

(Effective November 21, 2012)

The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan. To allow employers more time to update their payroll systems, Notice 2010-69, issued in fall 2010, made this requirement optional for all employers in 2011. IRS Notice 2011-28 provided further relief by making this requirement optional for certain smaller employers for 2012 Forms W-2 (meaning the Forms W-2 for calendar year 2012 generally furnished to employees in 2013).

Notice 2012-9, issued in January 2012, restates and clarifies guidance in Notice 2011-28. It provides guidance for employers that are subject to this requirement for the 2012 Forms W-2 and those that choose to voluntarily comply with it for either 2011 or 2012.

Employer-Provided Health Coverage Informational Reporting Requirements: Questions and Answers

Follow this link on the corresponding IRS site:

The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan.

Data Pro can handle printing this on the W2's by creating a "Special Pay Type" for the Health Care Benefits as illustrated below.

To set up the Special Pay Type you must follow the steps below:

Once you click the "Set Up Special Pay Type" option, you will see the screen on the following page.

Click on the "Create a Record" button.

The Special Pay Type should be set up like the example below:

The "DD" must be in the description followed by a space
and you can then enter the rest of the description as you would like it to be. This is how it should look once you have the Special Pay Type set up.

Click SAVE.

PLEASE NOTE: This will not record a transaction. You are simply setting this up as a holding place for the value in order to print the amount on the W2.

The next step is to add this Special Pay Type to every employee who received Health insurance benefits in 2012 and going forward.

Select each employee. Click on the Change button and then click the "Pay Types" button as shown in the following screen captures.

Do not enter any monetary amounts or totals. (Click Save)

The last step is to add the amount for each employee into their accumulator. Select the "Accumulator Option" button.

Select the Special Pay Type created and added from the above steps and click Continue.

Enter the total amount paid for by the Employer for the current year into line 12 and then click on "Save." This is the amount that will be reported in Box 12 of the employee's W2 and will also be reflected in your electronic file.

On the upcoming 2014 W-2s, please notice how the Healthcare Reporting Information will be printed Box 12 for each Employee.

SPECIAL NOTE: Be sure that "Exclude from W-2 Wages" is checked for any tax table collecting additional State tax (for example, @PA, @SDI). Otherwise, the amount of State Wages will be incorrect on your W-2 forms when they are printed.

Remember to check the Federal tax tables against your Circular E and State Tax Tables with your State Tax Table Publications. Should you have any problem or questions, please call our Support Services Department at (727) 803-1550, Monday through Friday 9:00 A.M. to 5:00 P.M. EST.

For information on W-2 and 1099 Tax Forms, view 1099/W2 Tax Form Tips & Instructions (PDF)

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