Report the employee's permitted QSEHRA benefit for the calendar year in Box 12, Code FF — regardless of actual reimbursements. The amount reported is the maximum the employee was eligible to receive, not the amount actually paid out.
The IRS is concerned with the employee's permitted benefit, not the amount the employee actually received in reimbursements.
Note: If an employee became eligible for the QSEHRA during the year (for example, due to a waiting period, hire date, or change in employment status), the reported permitted benefit should generally be prorated based on the period of eligibility.
Who is an "Eligible Employee"?
When determining which employees should have a QSEHRA benefit reported on their Form W-2, eligibility is determined by how your QSEHRA is structured and documented in your plan documents, not by whether the employee has health insurance coverage or submits reimbursement requests.
For example, if your QSEHRA is structured to allow participation for employees who:
Are regularly scheduled to work 35 or more hours per week; and
Have been employed by the company for at least 30 days
Then all employees who meet those requirements are considered eligible employees for purposes of QSEHRA reporting.
Eligibility for W-2 reporting is determined by the terms of your QSEHRA plan documents, not by whether the employee enrolled in health coverage, submitted claims, or received reimbursements.
What if an eligible employee did not use the QSEHRA?
The permitted benefit must be reported on the Form W-2 of each employee who was eligible for the QSEHRA during the year, regardless of whether the employee submitted reimbursement requests or received reimbursements.
Employees who did not participate in the QSEHRA, did not submit claims, or did not receive any reimbursements may still have a reportable permitted benefit if they were eligible under the terms of the plan.
The amount reported should reflect the employee's permitted benefit based on their period of eligibility during the year.
This information is intended for general informational purposes and should not be construed as tax or legal advice. Employers should consult their tax advisor regarding their specific reporting obligations.