Code DD on your W-2 is the total yearly cost of your employer-sponsored health coverage, combining what your employer paid and what you paid in premiums. It sits in Box 12 and is informational only. You don’t add it to your income, you don’t deduct it, and you don’t enter it anywhere on your Form 1040.1Internal Revenue Service. Reporting Employer-Provided Health Coverage on Form W-2
What the Dollar Amount Represents
The figure next to Code DD is the full price tag on your health plan for the year: your employer’s contribution plus your own premium payments, whether those came out of your check pre-tax or after tax.2Internal Revenue Service. Form W-2 Reporting of Employer-Sponsored Health Coverage For most workers, the employer’s share, which never appears as a paycheck deduction, is the larger portion.
For context, the average total cost of employer-sponsored coverage in 2025 was roughly $9,325 for an individual plan and about $26,993 for a family plan. If your number falls somewhere in that neighborhood, it’s likely correct. If it’s wildly off, that’s a reason to check your pay stubs and plan documents.
The requirement itself came from the Affordable Care Act, which amended the W-2 reporting statute to require disclosure of the aggregate cost of applicable employer-sponsored coverage.3United States Code. 26 U.S.C. 6051 – Receipts for Employees It was originally meant to support an excise tax on high-cost health plans. That tax was repealed in 2019 before it ever took effect; the reporting line stayed.
It Doesn’t Change What You Owe
This is the part worth repeating: the Code DD amount is not taxable. It isn’t included in Box 1 (wages), Box 3 (Social Security wages), or Box 5 (Medicare wages).2Internal Revenue Service. Form W-2 Reporting of Employer-Sponsored Health Coverage The long-standing tax exclusion for employer-provided health coverage under Section 106 of the Internal Revenue Code hasn’t changed.4Office of the Law Revision Counsel. 26 U.S.C. 106 – Contributions by Employer to Accident and Health Plans
When you file, ignore Code DD entirely. Tax software won’t even prompt you for it. An error in that box won’t trigger an IRS notice against you or hold up your refund.
Why Some W-2s Don’t Show It
Not every employer has to fill in Code DD. The IRS gives smaller employers transition relief: if your employer filed fewer than 250 W-2 forms for the prior calendar year, they’re exempt from Code DD reporting.5Internal Revenue Service. Employer-Provided Health Coverage Informational Reporting Requirements – Questions and Answers The 250-form threshold is counted per employer entity, without aggregating related companies.2Internal Revenue Service. Form W-2 Reporting of Employer-Sponsored Health Coverage That relief remains in place until the IRS gives at least six months’ notice of a change. So if you work for a small company and see nothing for Code DD, that’s normal, and your coverage is still non-taxable.
Retirees and former employees are another gap. An employer is not required to issue a W-2 solely to report the value of health coverage for someone who wouldn’t otherwise get one.2Internal Revenue Service. Form W-2 Reporting of Employer-Sponsored Health Coverage If you’re retired and still on a former employer’s plan but no longer earning wages, don’t expect a Code DD entry. If you left mid-year, your Code DD will reflect only the months you were covered as an employee.
What’s Included and What’s Left Out
Code DD captures your main medical plan, but not every health-related benefit your employer offers. That’s why your figure might be higher or lower than you’d guess.
Included: the full cost of your group health plan (both shares combined); coverage for a domestic partner who isn’t your tax dependent, with the catch that the same amount may also appear as taxable income in Boxes 1, 3, and 5; employee assistance programs, wellness programs, and on-site clinics when the employer charges a COBRA premium for them; and employer contributions to multiemployer (union) health plans.2Internal Revenue Service. Form W-2 Reporting of Employer-Sponsored Health Coverage
Excluded: Health Savings Account contributions, which get their own line as Code W; employer contributions to Health Reimbursement Arrangements; stand-alone dental or vision plans not bundled into your medical plan; health FSAs funded entirely through your own salary reduction (and also when any employer contribution doesn’t exceed your salary reduction); after-tax hospital indemnity or specified illness policies; and self-funded plans not subject to federal COBRA, where reporting is optional.2Internal Revenue Service. Form W-2 Reporting of Employer-Sponsored Health Coverage
If the Number Looks Wrong
Add up the health insurance premiums deducted from each paycheck for the year, then add your employer’s share, which your HR or benefits department can confirm from plan documents. That total should roughly equal Code DD. Small rounding differences between pay periods are normal.
If it’s meaningfully off, ask payroll to review it. Because Code DD is informational, a mistake there won’t change what you owe. But an incorrect figure on that line can be a hint that something else on the same W-2 is wrong, and the other boxes do affect your taxes. If your employer issues a corrected W-2 (Form W-2c) for any reason, look over the updated Code DD alongside everything else to make sure the correction holds together.