Burr & Forman

12.16.2019   |   Blog Articles, Federal Tax, Nonprofit Organizations and Benefit Plans, Tax Law Insights

Ho, Ho, Ho, ACA Reporting Relief Five Years in a Row

Since 2015, employers and health insurers have been required to report health plan coverage information to the IRS and to individuals.  Why?  The information is necessary in order for the IRS to administer certain portions of the Affordable Care Act (“ACA”), such as whether (1) a “pay or play” penalty is assessable for noncompliance with the coverage requirements, (2) an individual is eligible for a premium tax subsidy, and (3) the individual mandate penalty is assessable.

Recently issued Notice 2019-63 contains three gifts from the IRS in the form of limited relief to employers and insurers on these reporting requirements, similar to relief provided each year since reports were mandated beginning with the 2015 calendar year.

As its first gift, the IRS has extended the deadline to provide Forms 1095-B and 1095-C to individuals from January 31, 2020 to March 2, 2020 – a full thirty (30) day extension.  Why?  Because the IRS determined that a substantial number of reporting entities (employers and insurers) need additional time to gather and analyze the information and to prepare the Forms.  This relief is provided automatically.  Because of this relief, the IRS will not grant any requests for extension nor will it respond to any requests for extension.

As its second gift, no penalty will be imposed for the failure to provide Form 1095-B to individuals, provided two conditions are met.  These conditions are:  (1) the reporting entity posts a notice predominantly on its website stating that individuals (e.g., employees) may request a Form 1095-B, along with an email and physical address to request the Form 1095-B as well as a phone number to call with questions, and (2) the reporting entity provides the Form 1095-B within 30 days of receiving a request.  Why?  Because this Form is used to establish the individual mandate penalty which was reduced Since 2015, employers and health insurers have been required to report health plan coverage information to the IRS and to individuals.  to $0 starting in 2019.  In other words, the purpose for the Form 1095-B is now moot.  Note that this relief is not universal.  For an applicable large employer (“ALE”) under the ACA that offers self-insured coverage, the information that is normally provided on Form 1095-B is instead reported in Part III of Form 1095-C.  The Form 1095-B relief does not extend to Form 1095-C reporting on full time employees, but it does apply with respect to individuals who were not a full time employee for any month in 2019.  This means that an ALE need not provide a Form 1095-C to individuals enrolled in the self-insured plan who were not full-time employees.  As a practical matter, this limited relief for an ALE is a bit of a white elephant as it may be more time consuming to remove data on non-full time employees than to include them in the reporting.

As its third gift, the IRS is again applying the “good faith” compliance standard in determining whether a penalty for filing incomplete or incorrect Forms 1095-B and 1095-C will be imposed.  A penalty will not be imposed if the reporting entity made a good faith effort to comply with the applicable reporting regulations.  In determining good faith with respect to an employer, the IRS will take into account whether the employer made a reasonable effort to prepare the required information for reporting to the IRS and furnishing it to employees, such as gathering and transmitting the data to an agent for preparing/filing or testing its own ability to transmit the reports to the IRS.  Note there is no relief for Forms 1095-B and 1095-C that are filed late or not filed at all.

Notice 2019-63 does not extend any deadlines for filing Forms 1095-B and 1095-C with the IRS.  If filing on paper, these forms are due to the IRS on or before February 28, 2020.  If filing electronically, the deadline is March 31, 2020.  Keep in mind that if the reporting entity is required to file 250 or more Forms (determined separately for each type of Form), it is required to file electronically.  If a reporting entity is concerned about meeting the IRS filing deadline, it may request an automatic 30-day extension by filing Form 8809 before the filing deadline.

Despite the relief provided in Notice 2019-63, the IRS encourages reporting entities to file all forms as soon as possible.


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