Relief for Furnishing Forms 1095-B and 1095-C to Individuals
On December 2, 2019, the Internal Revenue Service (IRS) released Notice 2019-63 extending the ACA reporting deadline for providing statements to employees and also providing relief from certain penalties relating to health coverage reporting. The complete text of Notice 2019-63 is at this link.
The ACA added sections 6055 and 6056 to the Internal Revenue Code (Code), which require health coverage providers (i.e., insurers and self-insured plans) and "applicable large employers1 to report to employees and to the IRS if health coverage was offered and if the employee had coverage. The IRS issued final regulations in 2014 that set forth deadlines for filing that information and issued Forms 1094-B, 1094-C, 1095-B, and 1095-C to report this required information. The 1094 forms are provided to the IRS only, while the 1095 forms (employee statements) are provided to both employees and the IRS.
Large employers/plans or their administrator (large employers must send regardless if insured or self-funded)
- Form 1095-C to individuals
self-insured small employers/plans
- Form 1095-B to individuals
- Form 1094-B (with copies of the 1095-B forms attached) to the IRS
Non-compliance with the applicable due dates will result in penalties under Code sections 6721 or 6722 for each failure to timely furnish or file, i.e., up to $270 per participant capped annually at $3,339,000. As explained in the last bullet below, no penalty applies if a good faith effort can be demonstrated.
Summary of Notice 2019-63
- No Extension for IRS Filings. Notice 2019-63 does not extend the due dates for filing Forms 1094-B, 1095-B, 1094-C, and/or 1095-C with the IRS. Therefore, the due dates for filing transmittal forms with the IRS remain as February 29, 2020, if filing by mail, or March 31, 2020, if filing electronically. However, up to two automatic 30-day extensions are available under the normal rules by submitting a Form 8809.
- 31 Day Extension for Employee Statements. The Notice extends the deadline for employers and insurers to issue statements to employees on Form 1095-B or Form 1095-C from January 31, 2020 to March 2, 2020. An additional 30-day extension will not be available. However, please note the relief for 1095-B below.
- Relief for Providing 1095-B Statements to Individuals. The Tax Cuts and Jobs Act enacted December 22, 2017, reduced the penalty on individuals for failure to have health insurance coverage to zero, so an individual does not need the information on Form 1095-B in order to file an income tax return with the IRS. Therefore, the IRS will not penalize insurers, employers, or plans for failing to furnish a Form 1095-B to individuals (or with respect to a self-insured plan, a Form 1095-C to any employee who is not a full-time employee) for any month of 2019, provided that the following two conditions are satisfied:
- The reporting entity posts a notice prominently on its website stating that responsible individuals may receive a copy of their 2019 Form 1095-B upon request, accompanied by an email address and a physical address to which a request may be sent, as well as a telephone number that responsible individuals can use to contact the reporting entity with any questions, and
- The reporting entity furnishes a 2019 Form 1095-B to any responsible individual upon request within 30 days of the date the request is received.
The penalty relief does not extend to the requirement to furnish Forms 1095-C to full-time employees.
Cheiron Observation: The notice does not specify by what date when the notice has to be posted, but it seems advisable to make sure the notice is posted by the 1095-B due date of March 2, 2020.
- Extension of Good-Faith Relief for Reporting and Furnishing under Sections 6055 and 6056 for 2019: The Notice continues to remove penalties on entities that report incorrect or incomplete information on the 1094 and 1095 forms when these entities can show that they made good-faith efforts to comply with the information-reporting requirements of the regulations (both for furnishing to individuals and for filing with the IRS). This relief applies to missing and inaccurate taxpayer identification numbers and dates of birth, as well as other information required on the 1094 and 1095 forms. Reporting entities that fail to file an information return or furnish a statement by the extended due dates, except as otherwise provided in this notice, are not eligible for good-faith relief.
- Request for Comments: Treasury and the IRS request comments as to whether an extension of the due date for furnishing statements to individuals, and an extension of good-faith reporting relief, will be necessary for future years and, if so, why. The notice does not specify a deadline for comments. Taxpayers and reporting entities may submit comments electronically via the Federal eRulemaking Portal at www.regulations.gov (type "IRS2019-XX" in the search field) or via mail to: Internal Revenue Service, Attn: CC:PA:LPD:PR (Notice 2019-XX), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044.
Action Needed Now: In order to meet the deadlines, employers, administrators, and insurers should continue to gather the required data, prepare returns, and run tests on their systems for the electronic transfer of information to the IRS. If the 31 day extension for releasing employee statements, i.e., 1095-B or 1095-C statements, would be helpful in the future, then employers, administrators, and/or insurers should consider submitting a comment.
Cheiron Observation: The deadline to provide a statement to individuals has been extended for every reporting year since the issuance of final regulations in 2014.
Cheiron consultants can assist you with your ACA reporting obligations.
Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Accordingly, we do not provide legal services or tax advice.
1Generally, "applicable large employers" are employers with 50 or more full-time employees (including full-time equivalent employees).