Under transition relief that is still in effect, an employer that contributes to a multiemployer plan (the term used to describe a union plan) is not required to include the cost of coverage provided to an employee under that multiemployer plan in determining the aggregate reportable cost. Thus, if the only applicable employer-sponsored coverage provided to an employee is provided under a multiemployer plan, no reporting is required on the Form W-2 for that employee. That transition relief was published back in 2012 (when the W-2 reporting obligation first became effective) but is still in effect. So, the employer would not be required to report on union employees' Forms W-2.

That said, union employees would be included in the count to determine if the employer has to report on other employees' Forms W-2. As background, employers that file fewer than 250 Forms W-2 for the previous calendar year are not required to include the aggregate reportable cost on the current year's Forms W-2, and that count is determined on an EIN-by-EIN basis (the aggregation/controlled group rules do not apply). So, generally speaking, to determine if an employer must report the cost of coverage for 2022, the employer would look back and determine if they filed fewer than 250 Forms W-2 under their EIN in 2021. If the count is less than the 250-form threshold, then the employer wouldn't be subject to the Form W-2 cost of coverage reporting for 2022.

Applying that to the union employee example, if in 2020 the employer employed 200 union employees and 75 non-union employees, the employer would have filed more than 250 Forms W-2 in 2021. Therefore, the employer in 2022 would have to report the aggregate reportable cost on the non-union employees' Forms W-2 (even if they didn't have to report on the union employees' forms, per the above exception).

The W-2 reporting requirement also applies to employer-sponsored major medical coverage, both fully and self-insured (e.g., PPO, POS or HDHP). In addition, the requirement applies to prescription drug coverage and any dental/vision coverage that is combined with major medical coverage. However, an employer would not report any 'excepted benefits' (those not subject to HIPAA, and thereby exempt from ACA), including stand-alone dental or vision plans, non-coordinated and independent benefits (such as hospital indemnity or specific-illness plans), and health FSA salary reduction elections (but there are special rules regarding optional employer flex credits that could be used to contribute to an FSA). HRAs, HSA contributions, long-term care and coverage under Archer MSAs are also not included.

Employers will also want to review their EAP, wellness and on-site medical clinic arrangements and programs. If COBRA applies to those plans, then the cost of these programs will need to be included in the reportable cost. Whether COBRA applies is a trickier analysis, but it basically comes down to whether the EAP, wellness program or on-site medical clinic provides medical care. Employers should work with outside counsel in making that determination.

If the employer continues to have questions, they should review their obligations under this requirement with their advisor. Additionally, the IRS has provided a Q&A to assist employers in both determining whether they are subject to the reporting requirement and calculating the total cost of coverage. NFP has information as well. Please ask your advisor for more information.