IRS Extends ACA Employer Reporting Due Dates

Employers will have 60 more days to send notices to participants and beneficiaries, and about 90 more days to send notices to the IRS about health coverage offered and employees’ health coverage status, the IRS announced Dec. 28.

IRS Notice 2016-4 extends the due dates of the information reporting requirements for insurers, self-insuring employers and certain other sponsors of minimum essential coverage that is required under the Affordable Care Act (tax Code Sections 6055 and 6056).

Employers send 1095s to employees first, then send a 1094 to the IRS (along with copies of the 1095s they sent to employees) afterward. In general, “C” forms are for employers to complete, and “B” forms are for insurers. Reporting is required under the ACA’s employer and individual mandates, and its goal is to:

• prove that the employer complies with the employer mandate by offering affordable, minimum value health coverage to its full-time employees;
• provide individuals with information on their employer health plans, so they can show they comply with the individual mandate;
• help IRS decide whether individuals who purchased exchange coverage are entitled to a subsidy; and
• help IRS determine penalties for failing to comply with both mandates. Here is more information on the reporting requirement under Sections 6055 and 6056.

Notice 2016-4 extends the due dates for the following 2015 forms:

1. Form 1095-B, “Health Coverage,” from Feb. 1, 2016, to March 31, 2016. This form is furnished to individuals and informs them about the nature of their coverage, the dependents covered and the period of coverage. It also includes information on the plan sponsor, employer and insurance company. It normally is filled out by the issuer of fully-insured plans. However, self-insured employers that have fewer than 50 full-time employees also must report with this form.
2. Form 1095-C, “Employer-Provided Health Insurance Offer and Coverage,” from Feb. 1, 2016, to March 31, 2016. “Applicable large employers” must furnish these to every full-time employee — whether or not enrolled in the health plan — and any other employee enrolled in the employer’s health plan. It is similar to the other 1095 form, but it includes the employee share of the premium, and focuses on employer compliance with the ACA’s pay-or-play mandate.
3. Form 1094-B, “Transmittal of Health Coverage Information Returns,” from Feb. 29, 2016, to May 31, 2016, if not filed electronically. But if filed electronically, the return is due June 30, 2016. This transmittal form is furnished to the IRS and gives the number of 1095-B forms submitted.
4. Form 1094-C, “Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns,” from Feb. 29, 2016, to May 31, 2016, if not filed electronically (if filed electronically, June 30, 2016). Large employers use these forms to tell the IRS which employees received offers of health coverage, and who is actually covered.

The IRS said it is ready to accept filings of the information returns on Forms 1094-B, 1095-B, 1094-C, and 1095-C beginning in January 2016, which is when they were expected in the first place. The agency encouraged employers and other “coverage providers” to furnish statements and file the information returns as soon as they are ready.

Penalties under tax Code Section 6722 or 6721 can be imposed for failing to file these returns. The notice says the agency will be much more lenient with filings that need to be corrected; but penalties should be harsher for completely failing to file.

The automatic and permissive extensions that existed before now no longer apply, the agency stated. Therefore the new deadlines are now hard deadlines. But penalties may be waived if failures are due to “significant mitigating factors or events beyond the reporting entity’s control.”

On Dec. 7, the IRS increased the penalty on “providers of coverage” — employers and insurers — that fail to report, and violate Code Sections 6722 and 6721. The fine is now $250 for each return that was not sent, with a maximum penalty of $3 million. That’s a drastic increase over the previous amounts, which were $100 for each failure and a total penalty of $1.5 million.

While welcoming the change, the ERISA Industry Committee called the ACA filing complicated and onerous. Companies have to create infrastructure to track and report the requirement information for potentially very large numbers of people; they also have difficulty finding vendors who can help them with the reporting, the group said.