IRS Finalizes Permanent Extension of ACA Reporting Deadlines
On December 12, 2022, the IRS released its final regulations that permanently extend the deadline to furnish Forms 1095-C and 1095-B to individuals, and, in limited circumstances, provide an alternative method of furnishing these forms to individuals. The final regulations are largely the same as the proposed regulations that were released in November 2021. Our client alert on the proposed regulations can be found here.
Deadline to Furnish Forms 1095-C and 1095-B to Individuals
The final regulations provide an automatic 30-day extension for reporting entities to furnish Forms 1095-C and 1095-B to individuals. This means that the deadline is generally now March 2 (or the next business day if this date falls on a weekend or legal holiday). Since this 30-day extension is automatic, the final regulations no longer allow reporting entities to submit a written request for an additional extension to furnish Forms 1095-C and 1095-B.
The final regulations also do not extend the deadline to file Forms 1095-C and 1095-B with the IRS. Reporting entities generally must file these forms with the IRS (along with the applicable transmittal statement) by February 28 (if filed on paper) or by March 31 (if filed electronically). Reporting entities may, however, request individual extensions to file these forms with the IRS.
Alternative Method of Furnishing Forms 1095-C and 1095-B to Individuals
Insurers and “Non-Large” Employers (Form 1095-B)
Insurers and “non-large” employers that sponsor self-funded group health plans are still required to prepare and file the Form 1095-B with the IRS under the final regulations. However, these entities are not required to furnish individuals with copies of the Form 1095-B as long as the entity satisfies the following requirements:
- The entity posts a “clear and conspicuous notice” on the entity’s website by the applicable furnishing deadline (generally, March 2nd under the final regulations) stating that individuals may receive a copy of their Form 1095-B upon request.
- The notice must contain both an email and a physical address that individuals can use to request their Form 1095-B, and a telephone number that individuals can use to contact the entity with questions. The final regulations contain an example showing how an entity can provide a “clear and conspicuous notice.”
- The entity must also retain the notice on its website until October 15 of the year following the calendar year to which the form relates. For example, for the 2022 reporting year, the notice must stay on the entity’s website until October 15, 2023.
- The entity furnishes Form 1095-B to any responsible individual within 30 days of the date that the entity receives the request.
Applicable Large Employers (Form 1095-C)
Under the final regulations, an alternate method of furnishing Forms 1095-C is generally not extended to applicable large employers (“ALEs”). However, Forms 1095-C that are prepared on behalf of part-time employees and non-employees enrolled in an ALE’s self-funded group health plan (such as former employees enrolled in the self-funded group health plan under COBRA or retiree coverage) are not required to be furnished to these individuals if the ALE complies with the requirements listed above (i.e., the ALE posts a “clear and conspicuous notice” on the employer’s website that the Form 1095-C is available upon request, retains the notice on its website until October 15 of the year following the calendar year to which the form relates, and furnishes the Form 1095-C within 30 days upon request). It is important to note that ALEs must still furnish Forms 1095-C to all full-time employees that were enrolled in the employer’s health plan.
Good-Faith Reporting
The IRS may impose penalties of up to $280 per form for failing to furnish an accurate Form 1095-C or 1095-B to an individual and $280 per form for failing to file an accurate Form 1095-C or 1095-B with the IRS. Under previous good-faith reporting relief, the IRS generally did not impose penalties for incomplete or inaccurate forms when the reporting entity could show that it “made good-faith efforts to comply with the information-reporting requirements.” However, in the final regulations, the IRS confirmed that this good-faith reporting relief is no longer available. This means that the IRS may now assess penalties for inaccurate Forms 1095-B and 1095-C beginning with the 2021 calendar year (i.e. for forms due in 2022). Entities may still be able to avoid penalties if the entities can show that they had reasonable cause for any failures.
Medicaid Coverage of COVID-19 Testing and Diagnostic Services
Finally, the final regulations provide that Medicaid coverage limited to COVID-19 testing and diagnostic services is not considered “minimum essential coverage” under the ACA. As a result, this coverage will not prevent an otherwise eligible individual from qualifying for the premium tax credit if the individual enrolls in coverage through the ACA Marketplace.
Conclusion
The final regulations are nearly identical to the proposed regulations released in November 2021. The regulations provide for a permanent 30-day extension of the deadline to furnish Forms 1095-C and 1095-B to individuals, and allow for an alternative method of furnishing Form 1095-B (and 1095-C, but only as applied to part-time employees and non-employees), both of which are welcome changes. Additionally, employers and insurers must prepare Forms 1095-C and 1095-B with care and accuracy in future years, as the final regulations make clear that the IRS may now impose substantial penalties for inaccurate information on these forms.
If you have any questions about ACA reporting, please contact a member of the Miller Johnson Employee Benefits and Executive Compensation practice group.