Code DD on your W-2 is the total yearly cost of your employer-sponsored health coverage, combining what your employer paid and what came out of your paycheck. It sits in Box 12 next to the letters “DD,” and it is there for information only. It does not add to your taxable income, and you do not enter it anywhere on your tax return.1Internal Revenue Service. Reporting Employer-Provided Health Coverage on Form W-2
What the Dollar Amount Represents
The number next to Code DD is the full price tag of your health plan for the year. That includes your employer’s contribution plus your own premium payments, whether those payments were taken out pre-tax or after-tax.2Internal Revenue Service. Form W-2 Reporting of Employer-Sponsored Health Coverage For most workers, the employer’s share is the larger portion, and you never see it as a paycheck deduction.
For a rough sanity check, the average total cost of employer-sponsored coverage in 2025 was about $9,325 for an individual plan and about $26,993 for a family plan. If your Code DD figure lands somewhere in that neighborhood for your coverage tier, it is likely right.
The reporting requirement came from the Affordable Care Act, which amended the W-2 statute to require disclosure of the aggregate cost of applicable employer-sponsored coverage.3United States Code. 26 U.S.C. 6051 – Receipts for Employees The goal was to let workers see what their health benefits actually cost, not just the sliver deducted from each check.
Code DD Does Not Change Your Taxes
This is the part that matters most at filing time. The Code DD amount is not 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 Employer-provided health coverage remains tax-free to employees under Section 106 of the Internal Revenue Code.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. Don’t add it to income. Don’t try to deduct it. Tax software won’t ask for it. The IRS has confirmed that individuals do not have to report this amount on their return.1Internal Revenue Service. Reporting Employer-Provided Health Coverage on Form W-2
What’s Counted in the Number
Code DD captures your primary medical plan, but not every health-related benefit. Knowing what goes in and what stays out explains why the total might look higher or lower than you expected.
Included
- Major medical coverage under your employer’s group health plan, both the employer share and your share of premiums.
- Coverage for a domestic partner who is not your tax dependent. That same coverage may also appear as taxable income in Boxes 1, 3, and 5.
- Employee Assistance Programs, wellness programs, and on-site clinics, but only when the employer charges a COBRA premium for the coverage. If no COBRA premium is charged, reporting is optional.
- Employer contributions to a multiemployer (union) health plan.2Internal Revenue Service. Form W-2 Reporting of Employer-Sponsored Health Coverage
Excluded
- Health Savings Account contributions, from either you or your employer. HSA contributions are reported separately under Code W.
- Employer contributions to a Health Reimbursement Arrangement.
- Stand-alone dental or vision plans that are not bundled into your main medical coverage.
- Health FSAs funded entirely through your own salary reduction, or where the employer contribution does not exceed your salary reduction amount.2Internal Revenue Service. Form W-2 Reporting of Employer-Sponsored Health Coverage
- After-tax hospital indemnity or specified illness policies, which are treated as excepted benefits.
- Self-funded plans not subject to federal COBRA, where reporting is optional.
Why Some W-2s Show No Code DD
Not every employer has to fill in this box. Under ongoing IRS transition relief, employers that filed fewer than 250 W-2 forms for the prior calendar year are 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 combining related companies. That relief remains in place until the IRS gives at least six months’ notice of a change. If you work for a small company and Box 12 has no DD entry, that’s normal, and it does not mean anything is missing from your return.
Retirees are another common case. An employer is not required to issue a W-2 solely to report the value of health coverage for retirees or former employees who would not otherwise receive one.2Internal Revenue Service. Form W-2 Reporting of Employer-Sponsored Health Coverage The coverage still isn’t taxable; there is simply no W-2 to put it on.
If you left a job partway through the year, the Code DD amount on that employer’s W-2 reflects only the months you were covered while employed there.
If the Number Looks Wrong
Start with your pay stubs. Add up the health premiums deducted across the year, then add your employer’s share, which HR or your plan documents can confirm. The total should be close to Code DD. Small rounding differences from pay period to pay period are normal.
If it’s significantly off, ask your employer’s HR or payroll team to review it. Because Code DD is informational, an error there will not trigger an IRS notice against you and will not delay your refund. It also won’t change what you owe. Still, an odd figure in Box 12 can be a hint that something else on the same W-2 may need a second look, so it is worth flagging. If your employer issues a corrected W-2 (Form W-2c) for any reason, check the updated Code DD along with the boxes that do affect your tax.