Some employers are required to report the aggregate cost of employer sponsored health insurance coverage in Box 12 on the W-2s. 21st Century Accounting has had the ability to support the reporting of the costs of employer sponsored health insurance as a deduction for many years. However, there was no obligation to show employer paid costs, so you may not have recorded them in your payroll setup.
In the December 1, 2012 Tax Update additional support was introduced to simplify recording of employer paid health costs. In addition to the deductions pay factor, employer paid costs can now be recorded as a non-cash benefit pay factor. W-2 Box 12 will aggregate all amounts from any combination of employee deductions, employer deductions, and non-cash benefit pay factors and show them as one amount labeled DD.
Determine if all costs have already been recorded in payroll:
If you have been accumulating both the employer and employee costs as a deduction pay factor, then all you need to do is to verify that the ‘Additional W-2 reporting’ field is set to ‘cost of employer sponsored insurance’ in your Payroll/Configure/Deductions.
If you have some health insurance costs that have not been recorded in payroll:
If you have not configured your health care deduction to record employer contributions, you should enter the employer side of your health insurance costs for the entire year-to-date at this time. In the interest of simplicity, you should enter the annual costs in a single payroll run.
- 1.In Payroll/Configure Non-cash Benefits:
Set Additional W-2 reporting to be ‘Cost of Employer Sponsored Health Plan’
Set Contribution method to be ‘Amount Per Pay Period’
2.Backup your company as a precaution.
3.Use Payroll/Configure/Global Employee Update to add the non-cash benefit to the employees.
4.Use either Calculate Payroll or Configure Employees to enter the annual cost for each employee.
5.Run a payroll to record the annual costs for all employees.
6.Use Payroll/Print/W2 report to verify your entries.
At this point, you should make appropriate adjustments to your payroll so that this annual cost isn’t recorded a second time. You can globally delete the non-cash benefit pay factor from each employees' configuration and plan on repeating the above process at the end of each year. Or you can modify the employee costs and accumulate them each pay period.