Sunday, August 1, 2010

Healthcare Insurance Reporting on W2

In the comment section of my earlier post re the reporting of the employer's contribution of health insurance payments, there appears to be some debate as to whether this will be considered additional income for all taxpayers, some taxpaters  or none. Here's the exact wording from the bill:



3 (a) IN GENERAL.—Section 6051(a) of the Internal

4 Revenue Code of 1986 (relating to receipts for employees)

5 is amended by striking ‘‘and’’ at the end of paragraph (12),

6 by striking the period at the end of paragraph (13) and

7 inserting ‘‘, and’’, and by adding after paragraph (13) the

8 following new paragraph:

9 ‘‘(14) the aggregate cost (determined under rules

10 similar to the rules of section 4980B(f)(4)) of applica11

ble employer-sponsored coverage (as defined in section

12 4980I(d)(1)), except that this paragraph shall not

13 apply to—

14 ‘‘(A) coverage to which paragraphs (11) and

15 (12) apply, or

16 ‘‘(B) the amount of any salary reduction

17 contributions to a flexible spending arrangement

18 (within the meaning of section 125).’’.

19 (b) EFFECTIVE DATE.—The amendments made by this

20 section shall apply to taxable years beginning after Decem21

ber 31, 2010.
Congratulations, if you have any clue as to what this means. As with the financial reform bill, this act is written in such an opaque manner that only the specialists, who put the paragraphs in, understand why a certain paragraph was put in and its ultimate purpose.

Given the above, it's clear that the portion of an employee's health insurance that is paid by the employer will be reported on W2s. It is not as clear that as RedState writes, as quoted in my earlier post, that additional taxes will be required on such for everyone.

Any misinterpretation by RedState can't really be blamed on RedState given the opaque manner in which the regulation is written.

Who really knows why this clause was put in there? It's possible it is for some future excise tax where this information will be used to, indeed, increase some taxes for individuals. Whatever the purpose, whenever additional dollar amounts are added to W2s, it is something to be very nervous about. 


  1. The parasitic political class has made a nice fat living for a long time, but every year they can't resist the temptation to find a new vein. Pretty soon, the host is going to die, it can only be bled so much.

  2. Thanks for correcting this. Its actually very clear to anyone that is familiar with the IRC. The section of the code that is referenced, Sec 6051, is part of the Administrative section and not the section where income is determined, which are sections Sec 61 to 291 (Sub-chapter A). As to why they want to know, my guess is that it will serve some kind of administrative purpose initially, but like all harmless things, some wise bureaucrat will find a way to exploit it for unintended purposes.

  3. What a pathetic attempt to save face after spreading misleading propaganda! Now you're trying to justify it with tenuous conjecture.