What Box Is Health Insurance on W-2?

A W-2 form, also known as the Wage and Tax Statement, is a document employers provide annually to employees and the Internal Revenue Service (IRS). This form details an employee’s annual wages, salary, and other compensation, along with the amount of federal, state, and local taxes withheld from their paychecks. It serves as a summary of an individual’s earnings and tax withholdings for the calendar year, which is then used to prepare their personal income tax return.

Identifying Health Insurance Information on Your W-2

Employer-sponsored health insurance costs appear in Box 12 of your W-2 form. This box is designated for reporting various types of compensation, benefits, or deductions that are not included in taxable wages in Box 1. Each specific item in Box 12 is identified by a two-letter code.

The code associated with the cost of employer-sponsored health coverage is “DD.” When you locate Box 12 on your W-2, you will see “DD” followed by a dollar amount. This reporting requirement began in 2012 under the Affordable Care Act (ACA), as mandated by Internal Revenue Code Section 6051.

Code DD represents the total cost of the employer-sponsored health coverage provided to you. This figure includes both the portion paid by your employer and any amounts you contributed as an employee, typically through pre-tax payroll deductions. The IRS mandates this reporting to provide transparency regarding the value of health coverage benefits.

Understanding the Reported Health Insurance Amount

The dollar amount next to Code DD in Box 12 reflects the total cost of your health insurance coverage for the year, including contributions from both your employer and any pre-tax payments you made as an employee. For instance, if your employer paid $5,000 and you paid $1,000 through pre-tax deductions, the amount in Box 12, Code DD would be $6,000.

This reported amount is primarily for informational purposes. The IRS requires employers to report this cost to provide employees with information about the total value of their health care benefits. This reporting does not mean the amount is taxable income to you.

The pre-tax employee contributions to health insurance plans are already excluded from your gross income reported in Box 1 of your W-2. The employer’s portion of health insurance premiums is generally considered a non-taxable benefit to the employee. Therefore, the amount shown in Box 12, Code DD, is typically not added to your taxable income.

Tax Implications of Health Insurance on Your W-2

The health insurance amount reported in Box 12, Code DD, generally does not impact your taxable wages or the amount of tax you owe. It is not included in the taxable wages reported in Box 1 of your W-2, meaning it does not increase your federal income tax liability.

For most taxpayers, the health insurance cost reported with Code DD does not lead to a deduction or a credit on their personal income tax return. You do not typically need to take any specific action with this amount when filing your tax return.