Q.- Do we have to report the cost of COBRA coverage on the Form W-2 for an employee who terminates employment in the middle of the year?
A.- Not necessarily. The Form W-2 reporting requirement applies only to employers who issued 250 or more Forms W-2 in the prior calendar year.
If an employer is subject to the Form W-2 reporting requirement, the employer may apply any reasonable method it chooses to report the cost of coverage to a former employee. The employer has discretion to decide whether it wants to include the cost of COBRA coverage as part of the aggregate cost of health insurance or not. The employer must be consistent. The same method must be used for all employees who terminate employment before the end of the year.
An employer is not required to report the cost of group health coverage to an individual for whom the employer is not otherwise required to issue a Form W-2. If the employer is not required to issue a Form W-2 to the COBRA participant, then the employer does not have to issue one to report the value of health coverage.
