Reporting Employer-Sponsored Health Care Coverage on W-2 in Sage 100
The Patient Protection and Affordable Care Act (ACA) requires employers to report the cost of coverage under an employer-sponsored group health plan. Reporting the cost of coverage on the Form W-2 does not mean the coverage is taxable. The value of the employer’s excludable contribution to health coverage continues to be excludable from an employee’s income and is not taxable. This reporting only is for informational purposes and will provide employees useful and comparable consumer information about the cost of their health care coverage. For more details, visit the IRS website.
Create an Employer Contribution deduction:
1. Open Payroll | Setup | Deduction Code Maintenance
2. Create a new deduction code
3. From the “Deduction Type” drop-down menu, select “Employer Contribution”
4. If applicable, enter “DD” in the Box 12 Code field
5. Enter or select the remaining applicable fields and click “Accept”
Assign the Employer Contribution to employees:
1. Open Payroll | Main | Employee Maintenance
2. Select the applicable Employee No.
3. Click “Deductions”
4. Select the Ded Code created above
5. Enter the per-payroll contribution amount in the “Ded Rate” field
6. If applicable, check “Automatic,” then click “OK”
Note: If adding these amounts at the end of the year, populate the Ded YTD field with the year-to-date contribution amount.
7. Click “Accept” twice
8. Repeat Steps 1 through 7 for all applicable employees
Note: Once set up, the Box 12 codes will automatically print on W-2 forms. If two or more deduction codes use the same Box 12 code, the amounts will be added together and the total amount will print on Form W-2.
Staying on top of the ACA is critical and challenging, particularly when it comes to your obligations under the law. With all the delays, legislative changes and shifting regulatory interpretations in recent years, you may feel a little overwhelmed now that 2015 is here.
Sage has set up an Affordable Care Act center on Sage City that includes many assets you may find useful in navigating the changes. (Some assets require an active Sage Business Care plan to access).