What Does the Information in Box 12 of Form W-2 Mean?
The information provided in box 12 of a W-2 is the value of employer-sponsored health care coverage costs, explains the Internal Revenue Service. Under Code DD, employers are required to report certain health coverage contributions and employee contributions if applicable.
In box 12, under code DD, an employer must report health coverage costs of major medical, health flexible spending accounts, domestic partner coverage, and hospital indemnity or specified illness coverage, states the IRS. It is optional to report other employer-sponsored health coverage costs, unless the employer charges a COBRA premium. In that case, the employer is also required to report employee assistance plan, on-site medical clinics and wellness programs costs.
The employer’s contribution to health coverage costs is not taxable, and it is excluded from the employee’s income, reports the IRS. Businesses, nonprofit organizations, government entities and any other employers that provide coverage under a group health plan are required to report.
While a DD code is the most common, other codes are possible and include capital letters A through Z, AA, BB, CC and EE, as Intuit TurboTax indicates. For example, if a J is placed in box 12, it means the employee received non-taxable sick pay. Codes D through G, S and H provide information on any contributions made to the employee’s retirement plan. Codes AA and BB are designated Roth contributions under a section 401(k) plan and a section 403(b) plan, respectively.