IRS Finalizes Affordable Care Act Reporting Relief

Since the inception of the annual reporting requirements under the Affordable Care Act for Forms 1094 and 1095, the IRS has been annually extending the deadline for employers to distribute those reports to individuals. In line with prior guidance, the IRS has now issued final regulations that provide for a permanent, automatic 30-day reporting deadline extension. The new regulations do not adjust the deadlines for submitting these forms with the IRS (although filers may request a 30-day extension from the IRS). As a result, the deadlines for employers to file forms are as follows:

• Deadline for providing Forms 1095-B and 1095-C to individuals: March 2
• Deadline for filing paper Forms 1094-B, 1095-B, 1094-C, and 1095-C with IRS: February 28
• Deadline for filing electronic Forms 1094-B, 1095-B, 1094-C, and 1095-C with IRS: March 31

All deadlines occur in the year after the year being reported (for example, reports for 2022 should be distributed to individuals no later than March 2, 2023). All deadlines come one day earlier in leap years. 

In issuing the regulations, the IRS also confirmed the end of the good faith standard for this reporting requirement. The complexity of the new requirements coupled with difficulties coordinating with vendors engaged to assist with the annual reports, have led to many errors and omissions by employers seeking to comply with the new requirements. The good faith standard has served to relieve many from penalties that would otherwise apply. Going forward, employers should be even more careful to confirm that the forms their vendors have prepared for these annual requirements are accurate and complete. 

The regulations also provide relief to employers who file the Form 1095-B. This relief applies narrowly to sponsors of self-funded medical coverage who exercise their option to use Form 1095-B to report information for plan participants who are not full-time employees for any month of the year (such as part-time employees, COBRA qualified beneficiaries, and retirees). For full-time employees (and often for all plan participants), “applicable large employers” who sponsor self-funded medical coverage will report the required coverage information in Part III of the Form 1095-C in lieu of filing a separate Form 1095-B; the requirements for filing the Form 1095-C have not changed. However, for employers that do file Form 1095-B, for as long as the individual mandate penalty remains $0, the new rules allow employers to distribute those forms only upon request, rather than automatically; provided that they meet certain notice requirements and actually furnish the forms within 30 days of a request. 

This new alternate reporting method also applies to insurers who report coverage information on the Form 1095-B. Accordingly, employers who offer fully-insured medical coverage should be aware that their participants may not automatically receive a hard copy of the Form 1095-B going forward if their insurer elects to use this alternate method of distributing the 1095-B.

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