Payroll >

Employer Paid Health Care Value

 

         

 

 

Employer Paid Health Care Value

The federal government requires that some employers report the fair market value for the health care they provide for each employee. This information is reported to the IRS on Form W2 in Box 12 (code DD) for each employee receiving health care benefits.

 

This tutorial walks you through the setup and implementation of this requirement; from setting up a Non-cash clearing account and an Employer Paid Health Care Value distribution to processing a manual check which assigns the dollar amount to Box 12 on the employee's W2.

 

This Help page contains the following sections:

 

Set up a Non-cash Clearing Account

Set up an Employer Paid Health Care Value distribution

Process a Manual Check to adjust Box 12 on an Employee's W2

 

 

Set up a Non-cash Clearing Account

A Non-cash Clearing Account needs to be set up in order to process a non-cash distribution such as an employer paid health care benefit. The following steps show you how to set up a Non-cash Clearing Account.

 

1. From the Payroll menu, select Modify -> Employer Information.

 

2. Next, select the General Ledger Interface tab.

 

3. If the Non-Cash Clearing Account field is blank, then click the Edit  icon next to it to add an account. If it is not blank, then make a note of the account so it can be used later in this tutorial.

NOTE: If the Interface with General Ledger? check box is not checked (and you do not want to interface with the General Ledger), then the Category listing does not display and you can proceed to the Set up an Employer Paid Health Care Value distribution section.

 

4. Specify the Non-Cash Clearing Account # and then click the Update button.

NOTE: The Account # specified is usually a Liability account type. Accounts can be added to the Chart of Accounts on the Chart of Accounts page.

 

5. Verify that the correct account number displays for the Non-Cash Clearing Account and then click the Update button to save the Employer Information.

 

 

Set up an Employer Paid Health Care Value distribution

An Employer Paid Health Care Value distribution must be setup in order to post this information to an employee's record. The following steps show you how to set up an Employer Paid Health Care Value distribution.

 

1. From the Payroll menu, select Modify -> Compensation Information.

 

2. Enter the letter "E" in the Description field, select the View All Compensation Types radio button, and then click the Search button.

 

3. Click the Edit  icon next to the Employer Paid Health Care Value compensation.

 

4. Next, click the  Add New Distribution icon-link.

 

5. Click the Edit  icon next to the Regular Pay pay type and then enter the Non-Cash Clearing Account. When finished, click the Update button.

NOTE: Use the same account specified on the Company Information page (Step 3 of the Set up a Non-cash Clearing Account section).

 

6. Verify that the Account numbers listed are correct and then click the OK button to add the new distribution.

 

7. Notice that the new distribution appears in the grid at the bottom of the Compensation Information page. Click the Update button to save your changes.

 

 

Process a Manual Check to adjust Box 12 on an Employee's W2

Manual checks can be used to adjust amounts on an employee's W2. In the example below, notice that Box 12 is empty. The following steps walk you through entering a manual check to increase Box 12 by $6,251. (This will also assign code "DD" to the Box 12.)

 

 

1. From the Payroll menu, select Enter -> Manual Check.

 

2. Search for and select the Name of an employee that needs Box 12 increased by $6,251.

 

3. Click the  Add New Compensation icon-link.

 

4. Select the Compensation and Distribution that was setup to adjust Box 12 and then enter the Amount of the adjustment. Click the OK button when you are finished.

NOTE: If you want to decrease the amount of Box 12 on the W-2, then enter a negative amount.

 

6. Enter the Check # and Check Date for the Manual Check.

NOTE: It is recommended that you designate a range of check numbers to be used for W2 adjustments that is outside your normal check run (e.g. 9000000-9999999). This helps you identify these check numbers during an audit or for general bookkeeping purposes. Also, it is recommended to use "December 31" consistently as the Check Date for manual check adjustments.

 

7. Click the Update button to save your changes.

 

8. Click the check box next to the Manual Check and then click the Post Manual Checks button.

 

9. The Manual Check Register appears. Review this report. If the information is correct, click the Finalize Post button. If the information is not correct, click the Cancel link and make the appropriate changes to the manual check.

 

10. After posting the manual check, you can run your W2s. Notice that Box 12 has increased by the amount of the manual check. (In this example, Box 12 has increased by $6,251 and the corresponding code "DD" is displayed.)

 

Compiled on 1/24/2018 8:42:27 AM