Effect on Payroll Departments
The health care law requires employers to report the overall cost of employer-sponsored group health coverage on their employees’ Form W-2, Wage and Tax Statements. Effective in 2013, the payroll provisions in the health care law will place a limit of $2,500 for the annual pretax deductible amount for health flex spending accounts.
The law will also require employers to withhold an additional 0.9% in Medicare taxes for individual employees with earnings over $200,000 ($250,000 if married). Employers will not have to distinguish the added Medicare tax amount from the total amount on Forms W-2 but will need to use an extra line to report that additional tax amount on Form 941.