Setting the Record Straight on W-2s

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3D"CPI-HR

Dear=20 Laura,

Recently, our=20 Compliance Director wrote an article for = Employee=20 Benefit News discussing how misinformation = surrounding=20 Health Care Reform (HCR) is rampant. = Perhaps=20 you have heard some of the rumors regarding W-2=20 requirements? Please review the article = below,=20 where Peter sets the record straight. =

As you=20 know, for all of our Benefits Brokerage and=20 Consulting clients we have = launched our=20 web-based resource Inform on=20 Reform^=A9. Through this = resource we=20 intend to provide timely AND accurate = information=20 on HCR. The information contained on this = site has=20 been vetted for accuracy by our legal = team. For=20 more information on HCR please login to Inform on = Reform^=A9=20 today!

As a special note, for clients = that=20 utilize both Benefits and Payroll services with = CPI-HR,=20 the W-2 reporting requirements can = be managed=20 seamlessly by your CPI-HR service team. = This is=20 one more process and responsibility that we can = help you=20 manage by integrating our services. To = find out=20 more about either of these services visit http://r20.rs6.net/tn.jsp?llr=3Dqwyt9icab&et=3D110372= 6839924&s=3D4416&e=3D001a1CDCiJLRWdmivxaRoJmDdyuiw4exaWvXFiZRosVr= Ce7rwp4LD00cgKS1KAaqQzFLw0vktAx4v03-dJzgsNS0pf6DBTN1KlnYhqof0JIs-Y=3D= ,=20 or contact your service team=20 professional.

Sincerely,

Your CPI-HR = Team

Setting=20 the Record Straight on the W-2=20 Panic

by=20 Peter J. Marathas, Jr.

Because=20 of health care reform, starting in 2011 = employees will=20 no longer be permitted to receive group health = insurance=20 from their employers on a tax-free basis, and = employers=20 will lose any corporate deductions they might = have with=20 respect to employer-provided health care=20 benefits.

Sound=20 bad? You bet, and it would be, especially if it = were=20 true. But it's not true. Not = even=20 close. And yet you can easily find this bit of=20 misinformation on the Internet at various Web = sites and=20 in posts by an assortment of anonymous = bloggers.

Misinformation=20 goes viral

A while=20 back, my e-mail inbox was overloaded with = inquiries from=20 clients asking me about this "change" to the tax = code.=20 Some even suggested that I was asleep at the = wheel for=20 not alerting them about it.

Here's a=20 sample from the e-mail that many of my clients=20 received:

Starting=20 in 2011, the W-2 tax form sent by your employer = will be=20 increased to show the value of whatever health = insurance=20 you are provided. So you'll be required to pay = taxes on=20 a larger sum of money that you actually = received. Why am=20 I sending you this? The same reason I hope you = forward=20 this to every single person in your address = book. People=20 have the right to know the truth because an = election is=20 coming in November. So vote intelligently, based = on your=20 values.

The last=20 sentence, of course, reveals the context of this = misinformation: election-year politics. And this = bit of=20 information was spread virally across the = country,=20 reaching thousands of e-mail boxes and prompting = many HR=20 and benefits professionals to worry about how = this=20 change would affect them.

However,=20 as your parents most likely taught you, truth is = never=20 measured by the number of times something is = said, or by=20 the number of people who repeat it. For the = record, like=20 many lies, there is a kernel of truth in this=20 one.

Straight=20 from the horse's mouth

PPACA=20 does impose upon employers many new substantive = and=20 reporting requirements. With respect to Form = W-2, it is=20 true that the law will require employers in 2012 = to=20 enhance their W-2 reporting by including = information=20 detailing the costs incurred for providing = health care=20 to employees.

Specifically,=20 W-2s for the 2011 tax year must include the = "aggregate=20 cost" of employer-sponsored group health = insurance=20 coverage, excluding any salary reductions = deferred to a=20 flexible spending account.

"Aggregate=20 cost" is the cost of the insurance to the = employer. We=20 are expecting further guidance from the IRS on = the=20 factors to be used to determine this aggregate=20 cost.

This=20 episode should serve as a reminder to employee = benefits=20 and HR professionals: Always consider the = reliability of=20 the source for your legal guidance, especially = when it=20 comes to PPACA.

Benefits=20 experts in cyberspace

One of=20 the perils of the modern age is that anyone, = regardless=20 of training, experience or credentials, can = establish=20 himself or herself as an expert, ready to = dispense=20 guidance and counsel on tricky legal issues, = including=20 those arising under PPACA.

Many of=20 these self-proclaimed experts will claim, in a = largely=20 self-serving way, that legal training is = irrelevant and=20 unnecessary. Their argument: Anyone can read a = statute=20 and figure out what it means, right? Frankly,=20 wrong.

A=20 well-trained lawyer learns early in her or his = career=20 that reading the statute, especially when it = comes to=20 either ERISA or the tax code, is only the first = step in=20 a very long and thoughtful analytical = process.

When it=20 comes to determining how a statutory requirement = applies=20 in a particular situation, information must be = gleaned=20 from numerous sources - case law from circuits = around=20 the country; complex regulations; and formal and = informal guidance from the IRS, the Departments = of Labor=20 and Health and Human Services and other federal=20 agencies.

There=20 really are no shortcuts that bypass either the = training=20 required to undertake this review or the review = process=20 itself.

Benefits=20 law in general, and PPACA specifically, is = complicated=20 enough on its own. Let's not make it more = difficult by=20 listening to, or taking direction from, those=20 ill-equipped to provide it. Let's be careful out = there.

About=20 Peter J. Marathas, Jr. =

Peter=20 J. Marathas, Jr., our Compliance Director, = received=20 his J.D. from the University of Illinois College = of Law,=20 magna cum laude, his M.A. from Bradley = University, summa=20 cum laude, and his B.A. from Bradley University, = cum=20 laude. In addition to being the Compliance = Director for Benefit Advisors Network, = he=20 is an employee benefits and executive = compensation=20 partner with Proskauer Rose=20 = LLP.

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