December 20, 2022

Final IRS regulations provide an automatic and permanent 30-day extension of the deadlines for employers and insurers to furnish Affordable Care Act (ACA) individual statements on health coverage or offers of coverage to ACA full-time employees (Forms 1095-B and 1095-C). The final regulations also allow an alternative method for furnishing individual statements related to minimum essential coverage (MEC), as long as the penalty for failing to meet the individual mandate remains zero. These final rules take effect for the reports due in 2023 for the 2022 calendar year. Therefore, the deadline for 2022 ACA individual statements is automatically extended by 30 days from Jan. 31, 2023, to March 2, 2023. For the 2021 reports due in 2022, employers and insurers could rely on the automatic 30-day extension provided under proposed regulations.

Automatic extension for individual statements

Since ACA reporting first began for the 2015 calendar year, IRS has repeatedly extended the deadlines to furnish individual statements. The final regulations permanently allow a 30-day automatic extension of the Jan. 31 deadline to March 2 (or March 1 in leap years) for furnishing Forms 1095-B and 1095-C. When the extended due date falls on a Saturday, Sunday or legal holiday, the deadline for furnishing statements is the next business day. IRS will not grant additional extensions.

Background on ACA requirement

Internal Revenue Code (IRC) Section 6055, added by the ACA, requires MEC providers to furnish by Jan. 31 an annual statement to covered individuals, indicating each month in which they had coverage during the previous calendar year. MEC providers — such as insurers, multiemployer plans and small self-funded employers — use IRS Form 1095-B to meet this requirement.

IRC Section 6056, also added by the ACA, requires applicable large employers (ALEs) to furnish by Jan. 31 an annual statement on their offers of health coverage to ACA full-time employees during the previous calendar year. ALEs use IRS Form 1095-C for this employer shared-responsibility (ESR) reporting requirement. ALEs sponsoring self-funded group health plans can comply with both the MEC and ESR reporting requirements by furnishing Form 1095-C to ACA full-time employees covered by the group health plan. An ALE can provide either Form 1095-B or 1095-C to covered individuals who are not full-time employees, such as retirees, participants receiving continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) or part-time employees.

IRS filing deadlines unchanged. Sections 6055 and 6056 also require MEC providers and ALEs to file 1095 reports with IRS. Reporters still must meet the Feb. 28 deadline for paper filings or March 31 for electronic submissions, accompanied by the appropriate 1094 transmittal form. However, an automatic 30-day extension of the IRS filing deadline is available by submitting Form 8809 before the relevant due date.

Alternative method for furnishing MEC individual statements

Because the Tax Cuts and Jobs Act (Pub. L. No. 115-97) reduced the shared-responsibility payment for individuals without MEC to zero beginning in 2019, most individuals — except residents in states with an individual mandate — no longer need Form 1095-B or 1095-C to demonstrate health coverage. Accordingly, IRS provides an alternative method for furnishing MEC individual statements, similar to the method first allowed in IRS Notice 2020-76. The alternative method is available only for years in which the individual shared-responsibility payment is zero.

Who can use the alternative method? Insurance carriers and small employers (with fewer than 50 ACA full-time employees) sponsoring self-funded plans will not be penalized by IRS for failure to furnish Form 1095-B if they use the alternative method for furnishing individual statements. ALEs with self-funded plans may also use the alternative method to furnish a MEC statement — either Form 1095-B or Form 1095-C — to covered individuals who are not full-time employees, such as covered part-time or former employees.

What does the alternative method require? An insurer or employer can take the following steps to furnish individual statements using the alternative method:

  • Adhering to the same deadlines for furnishing individuals statements via the standard method — i.e., by March 2 (or March 1 in leap years), the insurer or employer must post a clear, conspicuous notice on its website. The website notice — either on the main page or through a link on the main page — must inform individuals that a statement is available on request, provide an email and a physical address for these requests, and supply a telephone number for questions. The notice must be written in plain, nontechnical terms and use a font size large enough (including any visual clues or graphical figures) to call to a reader’s viewer’s attention that the information pertains to tax statements reporting an individual had health coverage.

Example. Healthy Food Inc., an ALE, sponsors a self-funded plan. The employer’s website includes a link on the main page that says “Tax Information.” This links to a secondary page with a statement entitled “IMPORTANT HEALTH COVERAGE TAX DOCUMENTS” that explains how retirees, COBRA participants or part-time employees may request a copy of Form 1095-B or Form 1095-C, as applicable. The notice includes Healthy Food’s email address, postal mailing address and telephone number.

  • The insurer or employer must retain the website notice until Oct. 15 (or the first business day after Oct. 15, if that date falls on a Saturday, Sunday or legal holiday) of the year after the calendar year to which the statement relates (e.g., Oct. 16, 2023, for 2022 coverage statements).

  • The insurer or employer must supply the individual MEC statement (Form 1095-B or 1095-C) within 30 days of receiving a request. The insurer or employer may furnish the statement electronically if certain requirements are met.

Implications for ALEs with fully insured group health plans

The alternative method of furnishing individual statements has no effect on a fully insured ALE’s obligation to furnish Form 1095-C to ACA full-time employees and submit those statements with a 1094-C transmittal form to IRS. Employers sponsoring fully insured group health plans also may want to determine their carrier’s plans for furnishing 1095-B statements. The obligation to provide Form 1095-B lies with carriers, and they may use the alternative method of furnishing the statements. However, employers may receive questions from employees who haven’t received a statement from the carrier. Accordingly, employers may want to ask their carrier where employees can obtain information about the individual statement and how they can request a copy.

Implications for ALEs with self-funded group health plans

ALEs offering self-funded health plans to ACA full-time employees can’t use the alternative method to provide statements to full-time employees. Any failure by ALE members to furnish Form 1095-C, including Part III, to ACA full-time employees enrolled in self-funded health plans will continue to trigger a penalty. But if a self-funded health plan covers part-time staff, COBRA enrollees or retirees, the plan can use the alternative method to furnish individual statements to any enrollees who did not qualify as ACA full-time employees for any month during a particular year.

No more penalty relief for good-faith reporting mistakes

The final regulations reiterate the elimination of transitional penalty relief for filings that, despite good-faith efforts to complete correctly, have “missing and inaccurate taxpayer identification numbers and dates of birth, as well as other information required on the return or statement.” IRS Notice 2020-76 previously announced that 2020 was the last year of transitional relief for reporting mistakes. Nevertheless, employers and insurers that fail to meet the reporting requirements may still be eligible for penalty relief if IRS determines the failure satisfies the standards for a reasonable-cause waiver under IRC Section 6724.

Coordination with state laws

Five states — California, Massachusetts, New Jersey, Rhode Island and Vermont — and Washington, DC, have implemented or enacted individual health coverage mandates. Reporting entities with health plan participants living in these jurisdictions may need to provide Form 1095-B or an alternative form to covered individuals, despite the federal relief.

Affected employers should consult with their carriers, third-party administrators and reporting vendors to develop a plan for the specific jurisdiction’s reporting obligations. Employers also should watch for additional guidance from relevant state or city agencies.

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