What
Informational reporting of the total cost of employer-sponsored group health coverage on employee Forms W-2 (Box 12, Code DD). Generally includes the employer plus employee pre-tax share for major medical (and certain integrated arrangements).
Who
Required for filers that issued 250 or more W-2s for the prior calendar year (measured per EIN). Optional for smaller filers unless the IRS changes the rule.
When
With Forms W-2 furnished to employees and filed with SSA each January (deadline: January 31, or next business day).
Risk
Information-return penalties under IRC Sections 6721/6722 apply to late or incorrect W-2s. 2026 per-form amounts: $60 (up to 30 days late), $130 (31 days through Aug 1), $340 (after Aug 1 or not filed), $680 for intentional disregard, with no maximum. Amounts are indexed annually.
250+
W-2 threshold
Required for filers that issued 250 or more W-2s for the prior calendar year, per EIN.
Code DD
Box 12
Report the total cost of employer-sponsored group health coverage here.
Jan 31
W-2 deadline
Same date to furnish to employees and file with SSA (or next business day).
| Item | Deadline | Notes |
|---|---|---|
| Furnish/file 2025 W-2s | Feb 2, 2026 (Jan 31 falls on Saturday) | Include Box 12 Code DD where required; same date to furnish to employees and file with SSA. |
| Furnish/file 2026 W-2s | Feb 1, 2027 (Jan 31 falls on Sunday) | Confirm plan mapping before final payroll run. |
Item: Furnish/file 2025 W-2s
Deadline: Feb 2, 2026 (Jan 31 falls on Saturday)
Notes: Include Box 12 Code DD where required; same date to furnish and file with SSA.
Item: Furnish/file 2026 W-2s
Deadline: Feb 1, 2027 (Jan 31 falls on Sunday)
Notes: Confirm plan mapping before final payroll run.
- List of employer-sponsored group health coverages (major medical options; whether an integrated HRA applies; ICHRA/QSEHRA if applicable).
- Payroll/HRIS configuration showing which plan codes feed Box 12 Code DD and the cost formula (employer plus employee pre-tax share).
- Employee-level totals for each reportable plan.
- Inclusions/exclusions reference: The IRS table of what to report, what not to report, and what's optional; see the Code DD Reference & Year-End Checklist section below.
1
Map coveragesIn payroll/HRIS, tag reportable medical plans (and any integrated arrangements you include) to feed Box 12 Code DD totals.
2
Confirm calculationsEnsure both employer and employee pre-tax portions are included for medical; exclude non-reportable benefits per IRS rules.
3
Test totalsRun a YTD audit for sample employees across tiers (EE-only vs. family), options, and mid-year changes (e.g., COBRA start).
4
CommunicateAdd to your year-end memo: "W-2 Box 12 Code DD is informational only and does not affect taxable wages."
5
Lock and fileAfter final payroll, generate W-2s with Code DD, furnish to employees, and file with SSA; retain proofs.
- To employees: Furnish W-2s by the deadline; electronic delivery requires prior consent and the ability to print or save.
- To SSA: File electronically via SSA Business Services Online (required if filing 10 or more W-2s); keep transmission receipts and acknowledgments.
- Corrections: Use Forms W-2c/W-3c if you discover errors after furnishing or filing.
- Plan mapping sheetWhat was included/excluded and why, with IRS references.
- Payroll reportsShowing employee-level Code DD totals and any mid-year adjustments.
- Copies of furnished W-2sAnd SSA filing confirmations/receipts.
- Employee communicationsExplaining Code DD is informational (retain distribution proof).
Common traps
Wrong plan mapping: Including HSA contributions or stand-alone excepted-benefit dental/vision in Code DD inflates the figure and requires corrected W-2s. Map each plan carefully before the first payroll run of the year, not at year-end.
Not testing mid-year changes: Employees who started COBRA mid-year, changed tiers, or switched plans need their totals verified separately. Run a sample audit across tiers and change events before locking W-2s.
FAQs
Does Code DD increase employee taxes?
No. Box 12 Code DD is informational only; it does not affect taxable wages, withholding, or the employee's tax liability.
Are HSA contributions included in Code DD?
No. Report employer HSA contributions (and employee pre-tax contributions through a cafeteria plan) in Box 12 Code W, not Code DD. Including them in Code DD would double-count and require a corrected W-2. See the HSA page.
Is stand-alone dental or vision included?
Stand-alone dental and vision plans that qualify as excepted benefits are excluded from Code DD. If dental/vision is bundled with major medical in a single plan, follow the IRS allocation rules in the W-2 instructions.
What about EAP, onsite clinics, or wellness programs?
Include them only if they provide medical care and are COBRA-eligible as part of your group health plan. If they are not COBRA-eligible, exclude them.
We filed fewer than 250 W-2s last year. Do we have to report Code DD?
No, the reporting requirement applies only to employers that filed 250 or more W-2s for the prior calendar year (per EIN). Smaller filers may report voluntarily but are not required to unless the IRS updates its guidance.
- IRS: Instructions for Forms W-2 & W-3 (Box 12 Code DD inclusions/exclusions)
- IRS: Form W-2 Reporting of Employer-Sponsored Health Coverage (Q&A, thresholds)
- IRS: Information Return Penalties (current per-form amounts and annual indexing)
- Multiple EINs: The 250-W-2 threshold is applied by filing EIN, not across the controlled group as a whole. An entity filing 200 W-2s under one EIN and 100 under another is not required to report under either EIN. Coordinate across related entities for consistency even when reporting isn't required.
- Former employees and retirees: Do not issue a W-2 solely to report Code DD. If a former employee or retiree receives a W-2 for other reasons (wages, taxable benefits, etc.), include Code DD on that W-2 if required. If no W-2 is otherwise needed, do not issue one just for Code DD.
- Mid-year COBRA elections: When an active employee moves to COBRA mid-year, the cost of coverage changes. Include both the active-employee period and the COBRA period in the Code DD total for the year. Test these cases in your pre-close audit.
- Mergers and acquisitions: When an employer is acquired during the year, the successor employer's W-2 filing obligation (including Code DD) depends on whether the successor files a combined W-2 or separate W-2s. Confirm the filing approach with payroll and counsel before year-end.
A quick-reference table of what belongs in Box 12 Code DD, and a checklist to run before you lock W-2s. Built from the IRS instructions so you don't have to hunt for them.
What to Include in Box 12 Code DD
| Coverage / Benefit | Report? | Notes |
|---|---|---|
| Major medical (employer-sponsored group health) | Yes, required | Include employer plus employee pre-tax share. |
| Health FSA, excess over employee salary reductions | Yes, required | Only the employer-funded excess; employee salary-reduction FSA amounts are excluded (see below). |
| Hospital indemnity / specified illness, paid pre-tax or by employer | Yes, required | If paid after-tax by the employee, do not report (see below). |
| EAP / onsite clinic / wellness programs | Yes, required | Only if the employer charges a COBRA premium for the program (i.e., it is COBRA-eligible). If not COBRA-eligible, exclude. |
| Domestic partner coverage included in employee's gross income | Yes, required | Include the full cost, even though a portion is already taxable. |
| Health FSA funded solely by employee salary reductions | No | Employee salary-reduction FSA contributions are excluded from Code DD. |
| HSA contributions (employer or employee pre-tax) | No | Report in Box 12 Code W instead. Including in Code DD is a common error requiring a corrected W-2. |
| Archer MSA contributions | No | Reported in Box 12 Code R or SS, not Code DD. |
| Hospital indemnity / specified illness, paid after-tax by employee | No | After-tax employee-paid premiums are excluded. |
| Accident / disability income coverage | No | Not a group health plan for this purpose. |
| Long-term care coverage | No | Excluded from Code DD reporting. |
| Liability / workers' comp / auto medical / credit-only coverage | No | These are excepted benefits and are not reportable. |
| Military / TRICARE / Indian tribal government health plans | No | Specifically excluded by IRS guidance. |
| 2% S-corp shareholder premiums already in gross income | No | Not required for 2% shareholders of S corporations. |
| Stand-alone dental / vision (excepted benefit, not integrated) | Optional | Employers may include or exclude. If bundled with medical, follow IRS allocation rules. |
| HRA contributions | Optional | Employers may choose to report HRA amounts; not required. |
| Multi-employer plan coverage | Optional | Optional for employers contributing to a multi-employer plan. |
| Self-funded plans not subject to COBRA | Optional | Employers sponsoring self-funded plans exempt from COBRA may report voluntarily. |
| Employers filing fewer than 250 W-2s | Optional | Small filers are currently exempt but may report voluntarily. |
| Early-termination W-2s / third-party sick pay W-2s | Optional | Employers may omit Code DD from W-2s issued solely for these reasons. |
Year-End Checklist, Before You Lock W-2s
- ☐ Plan mapping confirmed in payroll/HRIS, each plan code tagged correctly for Code DD
- ☐ Both employer and employee pre-tax shares included for major medical
- ☐ HSA contributions confirmed as Code W (not Code DD)
- ☐ Stand-alone dental/vision decision documented (include or exclude, per employer policy)
- ☐ EAP/wellness COBRA-eligibility confirmed, include only if COBRA-eligible
- ☐ Sample audit run across tiers (EE-only, EE+spouse, family) and mid-year events (COBRA, tier changes, plan switches)
- ☐ Former employees / retirees: no W-2 issued solely for Code DD; Code DD included on any W-2 issued for other reasons if required
- ☐ Year-end employee communication prepared noting Code DD is informational only
- ☐ Electronic filing confirmed via SSA Business Services Online if filing 10+ W-2s
- ☐ Plan mapping documentation saved for recordkeeping file