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Report Employer-Sponsored Health Care coverage on the W-2 form

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Summary

This process ensures compliance with Affordable Care Act reporting requirements. This also provides employees with cost visibility.

Resolution

CAUTION:

CAUTION: Sage support can't assist with third-party products, hardware, report customizations, or state and federal tax questions. Refer to our Scope of Support for more info. Contact your Sage business partner, network administrator, or accountant for assistance.

 

Reporting employer-sponsored health coverage 

The Affordable Care Act requires employers to report health coverage costs on Form W-2.
Reporting this amount doesn’t make the coverage taxable. 
The employer keeps its contribution excluded from the employee’s income and doesn’t tax it.
This reporting serves informational purposes only. It helps employees understand and compare their health care coverage costs.
For more details, visit the IRS website, Form W-2 Reporting of Employer-Sponsored Health Coverage.

Create an employer contribution deduction

  1. Open Payroll, Setup, Deduction Code Maintenance.
  2. Create a new deduction code.
  3. In the Deduction Type dropdown, select Employer Contribution.
  4. If applicable, enter DD in the Box 12 Code field.
  5. Enter or select the remaining applicable fields.
  6. 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 deduction code created earlier.
  5. Enter the per-payroll contribution amount in the Red Rate field.
  6. If applicable, select the Automatic checkbox, and click OK.
  7. Click Accept, and then click Accept again.
  8. Repeat these steps for all applicable employees.

 

NOTE:

Enter year-end amounts in the Month Amount fields so the totals match the Year to Date contribution.

 

Understand W-2 box 12 reporting behavior

  • The system prints Box 12 codes automatically on W-2 forms after setup.
  • The system combines amounts when multiple deduction codes share the same Box 12 code.
  • The W-2 form shows the total combined amount.

 

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