Proposed ACA Health Coverage Reporting Relief
New proposed rules give employers more time to distribute Affordable Care Act (ACA) forms, but no more “good faith” relief for reporting errors.
Automatic 30-Day Extension to Furnish Forms 1095-B and -C
The Internal Revenue Service (IRS) has proposed regulations that, once finalized, will make permanent an automatic 30-day extension for providing Forms 1095-B and C to individuals. A similar extension has been granted for the past several years. This is good news for employers and insurers who in past years have been forced to wait until late in the busy end-of-year tax reporting season to find out if an extension would apply.
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Action Required |
Deadline |
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Furnish individual 1095 forms |
March 2, 2022 |
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File on paper with IRS |
February 28, 2022 |
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File electronically with IRS |
March 31, 2022 |
Alternate Furnishing Method for Part-Time Employees Covered Under Self-Insured Plan
The proposed regulations do not change any of the compliance responsibilities applicable to large employers, who must still issue Form 1095-C to each full-time employee and file copies of each form with the IRS, even if the employee waived coverage under the employer’s plan.
The new rules do, however, propose to make permanent the alternative furnishing method available in past tax years for forms provided to part-time employees (and to non-employees such as COBRA participants) enrolled in self-insured coverage.
The alternative furnishing method involves making copies of 1095 forms available upon request, publishing a statement on the employer’s website, and maintaining this information until at least October 15 each year. Employers wishing to explore the alternative method are encouraged to closely review the requirements.
ACA Compliance Should Remain Top Priority
While this relief is welcome, employers should stay mindful of ACA responsibilities for three reasons:
- There is no extension for filing forms with the IRS; that deadline remains the same.
- The proposed regulations emphasize that the IRS will no longer grant “good faith effort” relief for minor ACA reporting errors. ACA reporting penalties can add up fast. Even if affordable coverage is offered to all full-time employees, employers still face stiff monetary penalties for late, inaccurate, or incomplete forms.
- In states with an individual mandate, including California, Massachusetts, New Jersey, Rhode Island, and Vermont, the state determines reporting requirements including filing deadlines which may or may not line up with IRS timeframes.
Employers are encouraged to work closely with their vendors, service providers, or internal ACA reporting team to ensure a smooth and successful ACA reporting process.
This blog is up to date as of December 2021 and has not been updated for changes in the law, administration or current events.