I hear that my health insurance is going to be reported on my 2012 W-2 form. Where on the W-2 is it going to appear? And will I be paying taxes on my health insurance?
Gimme (Tax) Shelter
Dear Gimme Shelter,
You are correct: the W-2 you receive in January 2013 will report the amount that you and your employer paid for your health insurance, plus your flexible spending account, health savings account or health reimbursement arrangement. It will show up in block 12 with the code “DD”. For 2012, the data is informational only, meaning that it will not go onto other forms, like your 1040EZ or state forms.
You will not be paying taxes on your health insurance, at least not until 2018 and maybe not even then. Starting in 2018, “Cadillac” plans – those that cost more than a certain amount – will be taxed. Everyone will get a tax break on health insurance premiums up to the “Cadillac” cost. Every dollar over the Cadillac threshold will be taxed at 40 percent. If your plan is more of a Chevy, then you won’t face paying taxes on it.
There is much controversy over the Cadillac plan tax. The law offers only one threshold. Different parts of the country might not have many plans that would qualify as Chevys, simply because the costs are higher there. The bigger controversy is over taxing health insurance at all.
We have many miles to go before we reach 2018, when this part of health reform takes effect. So keep changing the oil on your Chevy.