Just three weeks ago, we wrote that employers likely would not receive certain Affordable Care Act reporting relief to which they’ve become accustomed.
But in a welcome turn of events, the IRS just released proposed regulations that make permanent a 30-day automatic extension for furnishing Forms 1095-B and 1095-C to individuals. Such forms will now be due each year on March 2nd (or the next business day if March 2nd falls on a weekend/holiday), and the relief is immediate—furnishers can rely on the proposed regulations for 2021 reporting (due in 2022).
The proposed regulations do not change the February 28th/March 31st due dates for submitting these forms to the IRS when filing by paper or electronically, respectively.
The proposed regulations also offer an alternative manner of satisfying the requirements for health insurance issuers and governmental agencies to furnish Forms 1095-B to health plan participants and for self-insured employers to furnish Forms 1095-C with certain health care coverage information to part-time employees and non-employees (such as former employees). Under the new rules, these forms need not be automatically provided, as long as the furnisher prominently posts a notice on its website indicating the availability of the forms (with certain required language and contact information) and provides any such form within 30 days of an individual’s request. This rule is being put in place to simplify administration, given that the individual shared responsibility payment (i.e., the individual mandate) is currently $0 and, therefore, the forms aren’t required for individuals to complete their tax returns. It is subject to change if the individual mandate is increased in the future.
Self-insured employers furnishing Forms 1095-C to full-time employees may not use this alternative means and must provide Forms 1095-C to all such employees by the new deadline set forth above.
One caveat is that it isn’t yet clear whether these new (or analogous) rules will apply for states with their own individual mandate and reporting requirements (currently, California, Massachusetts, New Jersey, Rhode Island, Vermont, and the District of Columbia).
And, in perhaps their only downside, the proposed regulations confirm the end of the transitional good-faith relief for incorrect or incomplete ACA reporting. However, the general penalty exception remains for filers with reasonable cause for failing to timely or accurately complete their reporting requirements.