IRS Extends ACA Reporting Deadlines

On October 2^nd, 2020, the Internal Revenue Service (IRS) announced an extension for providing forms 1095-C and 1095-B to employees. The required forms are part of the Affordable Care Act (ACA) and now carry a deadline of March 2^nd, 2021. That date is a month later than the original deadline of January 31^st, 2021. Additionally, the IRS extended "good-faith effort" transition relief to employers for plan year 2020 reporting. The deadlines were not extended, however, for filing 1095 forms with the IRS. Those dates are still February 28th for paper filing or March 31st for electronic filing. IRS Notice 2020-76 includes information on the deadline extension. The IRS has extended the same January 31st deadline for distributing ACA information reporting forms for the past four years. The IRS will not grant an additional 30-day extension beyond this deadline for distributing forms. The agency encourages affected employers to send the forms to employees as soon as possible. Recently, the IRS released guidance allowing the deferral of withholding and payment of an employee’s Social Security tax. That guidance was in response to a Presidential Memorandum.

Background of ACA Requirements

Employers with 50 or more full-time or equivalent employees have to file Form 1095-C with the IRS. By filing, and providing employees with copies, employers are showing they offered eligible employees with ACA-compliant health coverage. Employers with that number of employees are also known as applicable large employers (ALE). In addition:

• If an ALE offers fully insured plans to employees, the insurance carrier provides Form 1095-B to covered individuals. This is in addition to the Form 1095-C provided by the ALE.
• If the plan is self-insured, Form 1095-C will include all of the ALE's ACA reporting information. Covered individuals will not receive a Form 1095-B.
• Smaller organizations (non-ALEs) sponsoring a self-insured plan must provide covered individuals with Form 1095-B but not Form 1095-C.

“Good-Faith Efforts”

The IRS may impose penalties up to $280 per form for failing to furnish Forms 1095-C or 1095-B to employees. A separate $280 per-form penalty may apply for failing to file an accurate form with the IRS. In Notice 2020-76, the IRS states that it will not impose penalties for incomplete or inaccurate forms due in 2021. This is only if, however, the business can show that it made “good-faith efforts” to comply with the information-reporting requirements. The good-faith reporting relief applies only to incorrect or incomplete information reported on 1095-C or 1095-B forms. It does not apply to a failure to timely furnishing or filing the forms.

Employer Takeaways

Despite the extended deadlines, employers should still gather the information required to complete, distribute, and file forms in early 2021. All employers, whether fully-insured or self-insured, must still file copies of the 2020 Forms 1095-B and 1095-C with the IRS. In a time when employees may be working remotely, employers might need to mail forms to those not physically present. In that situation, employers need to send forms with time included to respond to employee requests and make filing deadlines.