Disclaimer: Houghton College Can Not Provide Qualified Tax Advice to You Regarding The

The Payroll Department has been working hard to prepare your 2011 W-2 which will be distributed to you very soon. This email is to alert you of some unique items that you will notice on your W-2 this year.

Health Insurance

The Patient Protection and Affordable Care Act of 2010 (Health Care Reform Legislation) requires that employers include on the W-2 the amount the premiums paid for your health insurance during the calendar year. While the requirement to include this information was extended to the 2012 W-2 (distributed in January 2013), employers were encouraged to include it this year if possible. Therefore, this information will be included in Box 12 of your W-2 with a code of “DD.” This amount represents only the Univera insurance portion of your health insurance and by law it represents the total amount paid to the insurance company (including the amount deducted from your pay). It does not include the amount for the HSA (please see below). It is our understanding that this is an informational item only and is not used for any tax purposes.

If you are a participant in the Houghton College High Deductible Health Plan and HSA (or were at anytime during calendar year 2011), then the following applies to you.

Since we are not licensed tax professionals, we cannot provide professional tax advice to you regarding the tax treatment of your HSA. We can provide you with some details regarding how this information will be included on your W-2 and also share what our understanding is of the correct treatment of this information on IRS Form 8889. However, we encourage you to consult a qualified tax professional concerning this matter if you have any questions.

 According to the IRS, individuals must file Form 8889 with their income taxes if they (or someone on their behalf, including their employer) made contributions to their HSA account. Form 8889 must also be filed if individuals receive a distribution from their HSA, even if they do not make contributions in that year.

 Both your payroll deductions and institutional contributions to your HSA will be shown in W-2 Box 12 with a code of “W.” Because your contributions are considered pre-tax, it is our understanding that they are considered “employer contributions” and are to be entered on line 9 of Form 8889. Do not enter payroll deducted contributions on line 2. Since the payroll deductions for the HSA were taken pre-tax, you will not be able to claim a deduction on line 13 for contributions made via payroll deduction.

 If you took any funds out of your HSA by check, electronic banking, or Benny Card then you should receive a Form 1099-SA from Bancorp Bank reporting the distribution. These distributions from your HSA should be entered on line 14A of Form 8889. Assuming all of your distributions were to pay for qualified medical expenses, the amount on line 15 will be the same as line 14A. While you do not need to provide receipts, we urge you to keep them with your tax records in the event that you are ever audited.

 If you took any funds out of your HSA for something other than qualified medical expenses, please follow the IRS instructions carefully.

Please contact the Payroll Office if you have any questions regarding your W-2 once you receive it.

Thank you.