The IRS has announced a welcome 30 day extension of the 2021 due date for certain entities to provide 2020 health coverage information Forms 1095-B/C to employees and individuals. Limited penalty relief is also extended to these 2020 Forms. Visit this IRS webpage for information on the health coverage forms requirement.
Here’s a quick summary of the employee and individual Form 1095-B/C information reporting requirements:
Applicable large employers (ALEs) must send a Form 1095-C to individuals (fully-insured and self-insured plans).
Insurance carriers must also send a Form 1095-B to covered individuals for fully insured coverage – but see “Penalty Relief for Furnishing Forms 1095-B to Insured Parties” below.
ALEs must send a Form 1095-C (with Part III completed) to individuals for self-insured coverage (individuals will not receive a Form 1095-B).
Non-ALEs must send a Form 1095-B to individuals for self-insured coverage (individuals will not receive a Form 1095-C).
Due Date Extended to Issue Forms to Employees/Individuals Insurers, self-insuring employers, other coverage providers, and ALEs now have until March 2, 2021 to provide Forms 1095-B/C to employees and individuals, although the IRS encourages filers to furnish the 2020 Forms as soon as they are able. This extension for providing Forms 1095-B/C to individuals is automatic. Employers and providers don’t have to request it. The IRS will not grant an additional 30-day extension beyond this deadline.
Due Date NOT Extended for Forms to IRS The due dates for filing Forms 1094-B/C (with copies of the 1095-B/C) with the IRS are not extended. Therefore, employers filing by paper must submit their Forms to the IRS by March 1, 2021 (February 28 is a Sunday). Those filing electronically have until March 31, 2021. Extensions of these filing deadlines are available by filing Form 8809. As a reminder, employers and coverage providers who are filing more than 250 of these reporting forms are required to file electronically.
Penalty Relief for Furnishing Forms 1095-B to Insured Parties Form 1095-B must be filed with the IRS, but because taxpayers do not generally need this Form in order to prepare their individual returns (due to the repeal of the individual mandate), the IRS will not assess a penalty for an insurance carrier’s failure to furnish a Form 1095-B to an insured party as long as two conditions are met:
The carrier posts a notice prominently on its website stating that responsible individuals may receive a copy of their 2020 Form 1095-B upon request (accompanied by an email and physical address to which a request may be sent, as well as a telephone number that responsible individuals can use to contact the reporting entity with any questions); and
The carrier furnishes a 2020 Form 1095-B to any responsible individual upon request within 30 days of the date the request is received.
No Penalty Relief for Furnishing Forms 1095-C ALEs must continue to furnish Forms 1095-C to individuals due to the Affordable Care Act (ACA) employer mandate (which remains in effect), and employers sponsoring a self-insured medical plan are still required to complete Part III of the Form 1095-C for employees enrolled in the self-insured plan in 2020.
Good Faith Penalty Relief Finally, the IRS is providing one final extension of good faith relief from penalties for certain errors on the 2020 ACA Forms filed in 2021 (this will be the last year of the extension). The good faith standard applies to incorrect or incomplete information on the ACA reporting forms. Employers and coverage providers who work in good faith to complete and timely file the returns or statements will not be assessed penalties due to missing or inaccurate information. This relief applies only to missing and inaccurate information required on the Forms and does not provide relief in the case of reporting entities that do not make a good-faith effort to comply with the regulations or that fail to file an information return or furnish a statement by the due dates.
Note on State Employer Reporting Requirements Note that insurers and employers in certain states (e.g., California, Massachusetts, New Jersey, Rhode Island, Vermont, and Washington, D.C.) that have enacted individual mandates may have reporting requirements similar to the ACA federal requirements. Thus, issuers and employers in certain of these jurisdictions (e.g., New Jersey) may still need to furnish the Forms 1095-B (and Forms 1095-C for part-time employees) to certain individuals in the normal course, even if not required to under the federal reporting rules. See the New Jersey website for more information on that state’s employer reporting requirement. We recommend that clients touch base with their ACA reporting vendors to inquire whether they will satisfy any relevant state reporting requirements on the client’s behalf.
IRS Resources and Penalty Assessments Employers and plan sponsors should take note of the filing and timing requirements and review the information reporting requirements through IRS resources available at the Applicable Large Employer Information Center. The webpage can be used to understand the Forms 1094/5, to determine ALE status, and as a means to finding additional resources on these complicated filing rules. Employers should also continue to be on the lookout for IRS penalty letters or notices related to past ACA filings and should immediately present any materials received to their ACA reporting vendors, legal counsel, and qualified tax advisers. We note that the IRS is under pressure from the Treasury Inspector General for Tax Administration to assess ACA employer penalties (see Letter 226-J) for previous reporting years.
We will continue to monitor developments under the ACA and provide details on new and revised employer obligations as they take shape over time.
Should you have questions about this or any aspect of federal health insurance reform, contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.