Payroll: Health Insurance

Beginning with payroll year 2012, employers with 250 or more employers must report the employer's contribution to each employee’s health insurance on W-2s.

See: IRS W-2 Reporting of Employer Sponsored Health Coverage for explanation of which items need to be reported.

Background

W-2 Health Insurance Reporting is managed by 3 definitions:

• HLTINSCOST: Total Employee Insurance Cost
• HLTINSEMP: Employee Hlth Insurance Deductions
• HLTINSCO: Health Insurance Company Costs This is the amount reported on the W-2. When HLTINSCOST and HLTINSEMP definitions are configured this will be automatically calculated.

NOTES:

• If you have not configured Keystone to calculate Health Insurance Company Costs there is no need to worry. This number can be adjusted manually as described below in OPTION 1.
• If you have not setup calculation - use option 1 for the closing year, but consider using option 2 for the new year. In addition to W-2 reporting, the calculation option may be needed for the new 1095-B and 1095-C forms required for 2015.
• Make sure to configure W-2s to print the Health Insurance Company Costs definition: W-2 Setup Maintenance

Option 1: Adjusting Company Insurance Cost as needed

You can adjust the company cost definition when if the automatic calculation is not configured or if a discrepancy is found. You may still want to setup Calculation (Option 2 below) so that health insurance is calculated for the new year.

Preferred method:

• Run Adjust Definition Balances from the Payroll Setup/Utilities Menu
• Select the definition HLTINSCO
• Enter the year end date 12/31/2016
• Enter the adjustment amount needed. NOTE: there may be a negative amount in YTD. If so you will need to enter the positive of the amount plus the amount you wish to report. For example, if the amount shows as -6000 and the amount you want to report is $4000 you will need to enter $10000.

Note: If you make a mistake don't worry. You can further adjust the amount until you get the number required.

Option 2: Setting Up Keystone to calculate Company Insurance Cost

With this method, Keystone will store the total employee cost for insurance and subtract the employee paid amount resulting in the company cost that needs to be reported. This has the advantage of doing the work for you but requires that for the whole year the following configuration needs to be in place.

Total Employee Insurance Cost

This definition calculates the total cost of insurance. In order to set it up, you must set up the monthly cost factor for each employee. This can be done in:

• Year End Modifications - See Employee Values Tab.

• Adjust Definition Balances - Select the definition HLTINSEMP and modify the COST factor. All employees will list on a single grid.

• Employee File Maintenance - The old fashion way of editing an employee factor ... For each employee, go to the deduction tab, expand HLTINS_REP, THEN HLTINSEMP and modify the COST factor.

Employee Health Insurance Deductions

In order to calculate the Employee's contribution to health insurance, you need to tell keystone which of your deductions to include. This can only be done in Year End Modifications on the Misc Info tab. When payroll is run, Keystone will automatically include all checked deductions as employee contributions.

You are responsible for determining which company insurance plans are to be reported and the company paid amounts that are setup in the payroll system. General information is provided here, but this is an issue for your CPA if assistance is needed.

Health Insurance Company Costs

This amount is automatically calculated when payroll is run. No special setup is required.