Some employers are required to report the aggregate cost of employer sponsored health insurance coverage in Box 12 on the W-2s. In the past, 21st Century Accounting has supported costs of employer sponsored health insurance as a deduction. However, there was no obligation to show employer paid costs, so these may not have been recorded in payroll.
The December 1, 2012 Tax Update has additional support to simplify recording of employer paid health costs. In addition to the deductions option, employer paid costs can be recorded as a non-cash benefit. W-2 Box 12 will aggregate all amounts from any combination of employee side deductions, employer deductions, and noncash benefits and show them as one amount labeled DD.
All costs have already been recorded in payroll:
If you have been accumulating both the employer and employee costs as a deduction, then all you need to do is to verify that ‘Additional W-2 reporting’ is set to ‘cost of employer sponsored insurance’ in Payroll/Configure Deductions.
Some health insurance costs have not been recorded in payroll:
If you need to enter the employer side of health insurance costs for the entire year of 2012 at this time, then you will want to 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 will need to make appropriate adjustments to your payroll so that this annual cost isn’t recorded a second time. You can globally delete the noncash benefit 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.