Nothing is owed under 4980I, but related duties remain.
Repeal removed one tax and one cross-reference. It left in place the cost-of-coverage line on the W-2 and the excise taxes that sit beside it in the Code.
The Duties That Survived.
General information, not legal or tax advice. Check the cited sources before you act.
Cadillac Tax Overview
Go back to the overview for the history, the thresholds and the questions worth asking.
W-2 Code DD Reporting
Section 6051(a)(14) still calls for the cost of employer-sponsored coverage on the employee statement. The IRS treats the figure as informational.
Excise Taxes For Plan Failures
Sections 4980B and 4980D keep a daily excise tax on COBRA failures and on failures to meet group health plan requirements.
What Employers Do Now.
Under section 4980I, nothing. There is no calculation, no threshold test and no allocation to insurers or administrators. Any worksheet that still has a line for it can be retired.
The reporting line is a separate matter. Employers that provide applicable employer-sponsored group health coverage show its cost in Box 12 of Form W-2 using Code DD. The amount generally combines the employer-paid and employee-paid portions. The IRS says the figure is informational and that reporting it does not make the coverage taxable. For an employer required to file fewer than 250 Forms W-2 for the prior year, the IRS treats the reporting as optional under continuing transition relief.
Other charges in the Code were never touched by the repeal. Section 4980B imposes 100 dollars per day for each day a COBRA failure continues, counted for each qualified beneficiary. Section 4980D imposes 100 dollars per day for each affected individual when a group health plan fails requirements in the chapter 100 rules. The patient-centered outcomes research fee under sections 4375 and 4376 applies to policy and plan years ending on or before September 30, 2029.
Where Brokers Fit.
These are the items that surface at year end and at renewal: the payroll vendor asks which amount to place in Box 12, a COBRA notice goes out late, or a fee comes due with the plan year. We help clients keep them on one calendar and tied to the right plan data, while tax conclusions stay with the client’s own advisers.
A Short Checklist.
Confirm with payroll that Code DD is populated from current plan rates and not from last year’s figures.
Place the COBRA notice deadlines and the fee dates on the compliance calendar for the plan year.
If you file fewer than 250 Forms W-2, decide deliberately whether to report Code DD anyway and record the choice.
Mistakes To Avoid.
Dropping Code DD because the tax is gone. The two were linked in history, but the reporting duty stands on its own paragraph of section 6051.
Reading the Code DD amount as taxable income. The IRS says it is not.
Assuming relief for smaller filers is automatic. It turns on the number of Forms W-2 you were required to file for the prior calendar year.
Related Rules And Tools.
W-2 Box 12 Code DD: Reporting the Cost of Health Coverage
What the cost-of-coverage figure is and who must report it.
COBRA Notice Deadlines: Employer Guide
Election, notice and deadline mechanics for COBRA.
A Compliance Calendar for Your Plan Year
A plan-year view of the dates that matter.
Laws And Sources
Section 6051 — Employer statements to employees; paragraph (a)(14) covers the cost of employer-sponsored coverage.
IRS, Form W-2 Reporting of Employer-Sponsored Health Coverage — IRS explanation of Box 12 Code DD, including the informational purpose and the relief for smaller filers.
Section 106 — Exclusion from income of employer-paid accident and health coverage.
Section 4980B — Excise tax for failure to meet COBRA continuation coverage requirements.
Section 4980D — Excise tax for failure of a group health plan to meet certain requirements.
Section 4375 — Patient-centered outcomes research fee on insured policies.
Section 4376 — Patient-centered outcomes research fee on self-insured plans.
General information, not legal or tax advice.
Quick Answers.
Short replies on this page’s topic, each tied to a fuller guide.
Do we still report Code DD on the W-2?
Yes, if you provide applicable employer-sponsored group health coverage, except where the relief for employers filing fewer than 250 Forms W-2 applies and you choose not to report.
Is the Code DD amount taxable?
No. The IRS states that reporting the cost does not make the coverage taxable, and the employer contribution stays excludable from the employee’s income.
Do other excise taxes on health plans remain?
Yes. Sections 4980B and 4980D still apply to COBRA failures and to group health plan failures, and the research fee in sections 4375 and 4376 runs through plan years ending by September 30, 2029.
The Rest Of This Series.
What The Cadillac Tax Was And How It Worked
How the 40 percent excise tax on high-cost health coverage under IRC 4980I was built, what it measured and why no employer ever paid it.
Cadillac Tax Delays And The 2019 Repeal
The timeline of the Cadillac tax: enacted in 2010, postponed in 2015 and 2018, and repealed by Pub. L. 116-94 in December 2019.
How Cadillac Tax Thresholds Shaped Plan Design
How the shadow of the Cadillac tax thresholds pushed plan design choices, and how to rethink deductibles, HSAs and contributions now that it is repealed.
Questions To Ask A Broker About Legacy Cadillac Tax Concerns
Five questions to close out any lingering Cadillac tax worry: old contract language, budget models, W-2 Code DD, remaining excise taxes and future proposals.
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