New on your W-2: health plan payments

One survey says the yearly premium for employer-sponsored coverage averages $5,615 for a single person.
Scott Olson/Getty Images/File 2012
One survey says the yearly premium for employer-sponsored coverage averages $5,615 for a single person.

As workers open their W-2 forms, many will see a new box with information on the total cost of employer-sponsored health insurance coverage. To some, it will be a surprise, perhaps even a shock.

Workers often have little idea how much they and their employers are paying for coverage. In many cases, economists say, workers give up cash compensation to get and keep health benefits.

The disclosures, required by the 2010 health care law, are meant to make workers more cost-conscious. Health benefits are still tax-free. But labor unions and employer groups say it could be easier to tax them in the future, now that employers must report their value to the government.


The new information appears in Box 12 of the standard W-2 form, with a two-letter code, DD. The box shows the ‘‘cost of employer-sponsored health coverage.’’ And that amount is not taxable, the Internal Revenue Service says on the back of the form.

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Jay J. Makled, a union steward for the United Auto Workers at the Ford Motor Co. plant in Dearborn, Mich., described his reaction after seeing that his health coverage cost nearly $16,000 last year: ‘‘It’s quite expensive. I was surprised to see how much the company was paying for that benefit.’’

Hourly employees represented by the union there said they generally did not pay any of the premium.

The number on the W-2 form reflects the part of the cost paid by the employer and the part paid by the employee.

Professor Nicole Huberfeld, an expert on health law at the University of Kentucky, who received her W-2 form on Monday, said, ‘‘Most people who get health insurance from their employers have no idea how much it costs.’’


‘‘People are often shocked when they see the cost, $12,000 to $16,000 a year,’’ Huberfeld said. ‘‘Many Americans believe this is something they get free. But employers pay lower wages because they provide insurance.’’

In 2012, according to an annual survey by the Kaiser Family Foundation, premiums for employer-sponsored health insurance averaged $5,615 a year for single coverage and $15,745 for family coverage. Over five years, the costs have increased 25 percent for individual coverage and 30 percent for family coverage.

‘‘Health coverage is a big piece of people’s income and a large part of the social welfare budget,’’ said C. Eugene Steuerle, a tax economist at the Urban Institute.