For those employers offering an ICHRA there is no need to report this benefit on the employees W-2’s. However, those employers who are offering the HRA benefit of a QSEHRA do have requirements for reporting on the W-2’s.
QSEHRA is not considered a group health plan according to IRS Notice n-17-67 and is not subject to many group health requirements. This doesn’t mean that small employers do not have reporting requirements. One requirement is employers must report the total benefit on every eligible employee’s W-2.
The QSEHRA benefit should be reported in Box 12 using the designated code FF. It is important to report the total allowance that the eligible employee was entitled to receive during the calendar year, regardless of the actual payments or reimbursement amounts received.
Only the newly available QSEHRA funds should be included in the permitted benefit amount. Any carryover amounts from previous years should be excluded from the calculation.
It is worth noting that since a QSEHRA can be established at any time during the calendar year, it may have a short initial plan year. In the case of a non-calendar-year QSEHRA, the permitted benefit amount for the calendar year should be prorated accordingly.
For instance, if your organization offers $300 per month and the QSEHRA plan year begins on July 1, 2023, you will report $1,800 on the employee’s 2023 W-2. This calculation represents $300 multiplied by six months of permitted benefit in 2023.