Affordable Care Act (ACA): IRS Finalizes Permanent Deadline Extensions for Certain Forms
Dec 16, 2022
The IRS released final regulations permanently extending the deadline for employers to provide copies of the Form 1095 to employees and covered individuals. Amongst other things, the rules also confirm the good faith penalty relief for reporting errors is no longer available, making accurate reporting more important than ever.
Permanent Extended Deadline for Distributing Form 1095s to Individuals
Employer reporting rules require that employers provide a copy of the Form 1095 to employees and participants by January 31st. However, for the last few years the IRS has offered a 30-day extension to that deadline.
The final regulations released this week make this 30-day extension permanent. For 2022 calendar year reporting, statements must be provided to participants by March 2, 2023.
As a reminder, 1095C forms are primarily issued to individuals by Applicable Large Employers (ALEs). 1095B forms are primarily issued to individuals by insurance companies on behalf of all sized fully insured group health plans and by small non-ALEs on behalf of their self-funded or level-funded group health plans. The extension deadline mentioned above applies to both types of 1095 forms in reference to the deadline to provide copies to individuals.
Note: The due dates for filing Form 1094 and Form 1095 returns with the IRS have NOT been extended. For 2022 reporting, the deadline to file Form 1094 and Form 1095s with the IRS is February 28, 2023 for paper filers, and March 31, 2023 for those who file electronically.
In addition, employers required to comply with state individual mandate employer reporting requirements may face earlier deadlines. Currently, four states (CA, MA, NJ, RI) and D.C. have coverage reporting requirements.
End of Penalty Relief for Reporting Errors
Up through 2020 reporting, the IRS provided some relief from reporting penalties for errors or missing information. This relief was only available if the employer filed timely and could show it made good faith efforts to comply with information reporting requirements. The IRS makes it clear in the final regulations that this “good faith relief” is no longer available beginning with reporting for the 2021 calendar year.
For 2022 reporting due in 2023, the IRS may impose penalties of up to $290 per form for providing a participant with an inaccurate or incomplete forms. A separate $290 per form penalty could be applied for the same mistake in the forms filed with the IRS, potentially triggering a penalty of up to $580 per employee.
Permanent Relief for §6055 Statement Delivery (Primarily Form 1095-Bs)
Small employers (<50 full-time equivalents) who offer self-insured or level-funded group health plan benefits are required to report coverage information on Form 1095-Bs. As permitted in the past, the final regulations allow carriers and small employers completing Form 1095-Bs to meet delivery requirements to covered individuals by posting a notice prominently on a website or employer intranet.
The post must state that individuals may receive a copy of their Form 1095-B upon request and provide information on how to obtain their copy. Specifically, the notice must include an email address, a physical address to which a request for a statement may be sent, and a telephone number that individuals may use to contact the employer with any questions. The information must be posted no later than March 2, 2023 and remain posted until October 16, 2023.
Self-insured ALEs have the option to use Form 1095C or 1095B when reporting coverage information for employees who are part-time all year round or non-employees enrolled in their self-insured coverage. Statement delivery relief is available with respect to furnishing 1095Cs to these individuals only which means this statement delivery relief does not apply to 1095Cs furnished to full-time employees.
Note: We expect that most self-insured ALEs will simply distribute all Form 1095-Cs instead of utilizing the statement delivery relief for just part-time employees or non-employees enrolled in the coverage.
IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information. This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.
