Code DD in Box 12 of your W-2 reports the total annual cost of your employer-sponsored health coverage, combining what your employer paid and what came out of your paycheck. It is informational only. The number does not get added to your wages, does not appear on your Form 1040, and does not change your refund or the tax you owe. The Affordable Care Act added the reporting requirement so employees could see the full cost of their health benefits, which is usually much larger than the premium share on a pay stub.
What the Number Actually Represents
The amount next to Code DD is the aggregate cost of the health coverage your employer provided for the calendar year. It includes both the employer’s contribution and any premiums you paid through payroll deduction, whether those deductions were pre-tax or after-tax.1Internal Revenue Service. Form W-2 Reporting of Employer-Sponsored Health Coverage
For most people, this is the first time the employer’s share is spelled out in one place. If your paycheck shows $200 a month coming out for health insurance but Code DD reads $18,000 for the year, the gap is what your employer paid on your behalf. The figure runs on a calendar-year basis regardless of when your plan year starts or ends, so it may not line up neatly with your enrollment dates.2Internal Revenue Service. General Instructions for Forms W-2 and W-3 (2026)
What Gets Rolled Into Code DD
Code DD captures major medical coverage and a few closely related benefits. It leaves out several common benefit types that get reported elsewhere or not at all.
Included:
- Major medical insurance, whether fully insured or self-funded.
- Health Reimbursement Arrangements (HRAs). Employer contributions count toward the DD total.1Internal Revenue Service. Form W-2 Reporting of Employer-Sponsored Health Coverage
- Dental or vision coverage that is bundled into the medical plan rather than sold as a separate policy.
Excluded:
- Standalone dental or vision plans that are not integrated with the medical plan.1Internal Revenue Service. Form W-2 Reporting of Employer-Sponsored Health Coverage
- Hospital indemnity and specified illness policies that pay a fixed amount regardless of actual expense, whether paid pre-tax or after-tax.
- Health Savings Account (HSA) contributions from either the employer or you. Those are reported separately under Code W.2Internal Revenue Service. General Instructions for Forms W-2 and W-3 (2026)
- Salary reductions you make into a health FSA through a cafeteria plan.
On-site clinics, wellness programs, and employee assistance plans are reported only if the employer charges a COBRA premium for them. Otherwise, reporting is optional.
Why It Doesn’t Touch Your Tax Bill
The Code DD amount is not part of your taxable wages. You will not find it inside Box 1 (Wages, Tips, Other Compensation), Box 3 (Social Security Wages), or Box 5 (Medicare Wages and Tips). The employer’s contribution to your health coverage has been excluded from employee income under longstanding federal law: employer-provided coverage under an accident or health plan is not part of your gross income.3Office of the Law Revision Counsel. 26 USC 106 – Contributions by Employer to Accident and Health Plans The ACA layered a reporting requirement on top of that exclusion; it did not create a new tax.
The IRS puts it directly: “The amount reported does not affect tax liability, as the value of the employer contribution continues to be excludible from an employee’s income and is not taxable.”4Internal Revenue Service. Reporting Employer-Provided Health Coverage on Form W-2 If a large DD figure worries you, look at your Box 1 wages. The DD number is not sitting inside that total.
The One Exception: Domestic Partner Coverage
There is one situation where health coverage costs cross over into taxable income. If your employer covers a domestic partner who does not qualify as your tax dependent under IRS rules, the employer’s cost of covering that partner is imputed income to you. That imputed amount is added to your wages in Boxes 1, 3, and 5, and the full cost of coverage (including the partner’s portion) still gets reported under Code DD.1Internal Revenue Service. Form W-2 Reporting of Employer-Sponsored Health Coverage
The federal exclusion covers the employee, spouse, and dependents. A domestic partner who does not meet the IRS definition of a dependent falls outside it.3Office of the Law Revision Counsel. 26 USC 106 – Contributions by Employer to Accident and Health Plans If this applies to you, your employer has already added the taxable portion into your Box 1 wages during the year. Nothing extra to enter at filing time; the higher Box 1 figure is where it shows up.
Why Your W-2 Might Not Show Code DD at All
Not every employer has to report this. The IRS has ongoing transition relief for employers that filed fewer than 250 Forms W-2 for the preceding calendar year. Those smaller employers may skip Code DD entirely.1Internal Revenue Service. Form W-2 Reporting of Employer-Sponsored Health Coverage The relief has been in place since 2012 and stays in effect until the IRS issues further guidance. No such guidance has been issued as of 2026.
If you left a job mid-year and asked in writing for an early W-2, your employer must include Code DD on that form. Employers are not required, however, to issue a separate W-2 just to report health coverage costs for retirees or former employees who would not otherwise receive one.1Internal Revenue Service. Form W-2 Reporting of Employer-Sponsored Health Coverage
What to Do With Code DD When You File
Ignore it. You do not enter the Code DD amount anywhere on your Form 1040 or any supporting schedule. The IRS has confirmed that employees “do not have to report the cost of coverage under an employer-sponsored group health plan that may be shown on their Form W-2.”4Internal Revenue Service. Reporting Employer-Provided Health Coverage on Form W-2
If you use tax software, the program may still ask you to type in every Box 12 code that appears on your W-2. Enter Code DD and its amount if prompted. The software stores it but will not add it to your income.
If the Amount Looks Wrong
Because Code DD is informational, an incorrect figure will not change your refund or what you owe. A clearly wrong number is still worth fixing, since the IRS receives a copy of your W-2.
Start with your employer’s payroll or HR department. If there was an error, they can issue a Form W-2c (Corrected Wage and Tax Statement) to correct the DD amount. Unexpected figures often trace back to mid-year plan changes, COBRA continuation coverage, or the calendar-year reporting rule not matching your benefit enrollment dates.
If your employer refuses to correct a real error, you can reach the IRS at 800-829-1040. Because Code DD does not affect tax liability, the IRS is unlikely to step in unless the mistake also affects a taxable box on your W-2.