The IRS has announced a welcome 30-day extension of the 2022 due date for certain entities to provide 2021 Affordable Care Act (ACA) health coverage information Forms 1095-B/C to employees and individuals. The new due date to furnish these 2021 IRS Forms to individuals is March 2, 2022. Similar relief has been provided for the last several years and now the IRS is proposing that this 30 day extension relief be made permanent. This relief only extends the deadline to furnish Forms to individuals and does not extend the deadline to file Forms 1094-B/C with the IRS. We note too that the IRS has now confirmed that the limited penalty relief previously provided is no longer available for the ACA Forms.
Individual ACA Health Coverage Reporting Under the ACA, applicable large employers (ALEs) must send a Form to all full-time employees showing information on the employee coverage offer. This is relevant for the ACA employer mandate and the subsidy for health insurance exchange coverage. Insurers and ALEs with self-insured plans are also required to report which employees have enrolled in coverage, which was most relevant for purposes of the individual mandate (for which the penalty was reduced to zero in 2019). 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:
Insurance carriers must 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 to full-time employees, and must also send a Form 1095-C (with Part III completed) to any covered individuals for self-insured coverage (individuals will not receive a Form 1095-B).
Non-ALEs must send a Form 1095-B to covered individuals for self-insured coverage (individuals will not receive a Form 1095-C).
Permanent Extension of Individual Reporting Deadline ACA individual reporting is due to employees by January 31 of the year following the year to which the reporting relates. For each year since 2015, IRS has provided at least a 30 day extension. Many requested that this extended deadline relief be made permanent as the process by which reporting entities compile accurate health coverage offer and enrollment information is complex and often takes more time than the current January 31 deadline allows. In response, the IRS has now issued proposed regulations that would permanently extend for 30 days the ACA reporting deadline for ALEs to furnish employees with a Form 1095-C. Insurers, self-insuring employers, other coverage providers, and ALEs now have until March 2, 2022 to provide Forms 1095-B/C to employees and individuals. This extension for providing Forms 1095-B/C to individuals is now automatic and permanent. 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 Form 1094-B and Form 1094-C with the IRS are not extended. Therefore, employers filing by paper must submit their Forms to the IRS by February 28, 2022. Those filing electronically have until March 31, 2022. 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.
Alternative Method for Furnishing Certain Forms The IRS proposal confirms that the relief granted in 2019 and 2020 for furnishing Form 1095 to insured individuals will continue to apply for 2021. 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 2021 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 2021 Form 1095-B to any responsible individual upon request within 30 days of the date the request is received.
The notice must remain in the same location on the website until October 15 of the year following the calendar year to which the statement relates.
The proposal also adds similar relief for ALEs with respect to furnishing Forms 1095-C to individuals who were not full-time employees for any month of the year (e.g., retired employees or other non-employees enrolled in the ALE’s self-insured health plan, including certain individuals on COBRA). This relief would not apply to furnishing statements to the IRS or to an ALE’s full-time employees. ALEs must continue to furnish Forms 1095-C to full-time employees due to the 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 2021.
Good Faith Relief No Longer Available The IRS provided a final extension of good faith relief from penalties for certain errors on the 2020 ACA Forms filed in 2021 (this was the last year of the extension). This good faith standard was applied over the last several years for penalties that would otherwise apply for inaccurate or incomplete reporting if the employer could show that it made good faith efforts. The IRS has now confirmed this relief is no longer available.
Note on State Employer Reporting Requirements Note that insurers and employers in certain states (e.g., California, Massachusetts, New Jersey, Rhode Island, Vermont, 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 NJ 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 IRS 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 continues 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.