Look at W-2 to see what health insurance really costs

02/06/2013 9:53 AM

02/06/2013 9:54 AM

Look closely at your new W-2 form this tax season. Notice Box 12 and a two-letter code, DD.

If you work for an employer with 250 or more workers, information in that box for the first time is required by the Affordable Care Act. It tells how much you and your employer spent on your health insurance premiums.

“It’s going to be an eye-opener for a lot of people,” said Jerry Nebbia, a health benefits expert in Mercer’s Kansas City, Mo., office. “A lot of people have no idea what the true cost is.”

The W-2 reporting requirement for health insurance is to expand next year to include employers with fewer than 250 on payroll.

The health insurance benefit amount isn’t taxable as personal income — for now, anyway. But it is insight into your employer’s total cost of your compensation.

It also is a close reflection of what you would pay if you lost your employer subsidy and wanted to continue the same coverage under COBRA.

In the workplace at large, the cost of employer-paid benefits equals nearly 31 percent of total employment costs, according to the U.S. Bureau of Labor Statistics. Of that, health insurance costs account for about 7.7 percent of employer costs in private industry and about 11.7 percent in state and local government.

For some workers, employer-sponsored health insurance is a hefty benefit amounting to $5,000, $10,000, even $20,000 a year.

Last year, according to the Kaiser Family Foundation’s survey, employer-sponsored health insurance cost an average of $5,615 for individuals and $15,745 for families.

The requirement to include the full health insurance cost on W-2s was conceived partly to make employees more aware of the actual cost of their coverage. Often, employees with employer-subsidized coverage pay a fraction of the full premium cost.

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