The Internal Revenue Service (“IRS”) recently issued proposed regulations affecting certain reporting deadlines under the Patient Protection and Affordable Care Act (“ACA”).  Specifically, proposed regulations would make permanent an automatic 30-day extension for issuing Forms 1095-B and 1095-C to covered individuals and employees, which would otherwise be due by January 31. The proposed regulations also introduce an alternative method for providing these forms to individuals, which may reduce the reporting burden, and eliminated the good faith relief for reporting entities whose ACA forms are incomplete or inaccurate.

While the proposed regulations technically would become effective for coverage in calendar years beginning January 1, 2022, the IRS has indicated that reporting entities may rely on them starting with the reports due for 2021 (provided to covered individuals and employees in 2022).

Background on Required ACA Forms

Pursuant to Sections 6055 and 6056 of the Internal Revenue Code (the “Code”), providers of health coverage (insurance companies or self-insured plans) and applicable large employers (“ALEs,” generally those with 50+ full-time or full-time equivalent employees) must file statements with the IRS, and distribute statements to covered individuals or employees (as applicable) regarding whether they were offered or provided “minimal essential coverage” each month of the prior year. The prescribed forms for these statements are:

  • To the IRS: Form 1094-B (from insurers) and Form 1094-C (from ALEs) – currently due on or before February 28 (or March 31 if filed electronically)
  • To individuals: Forms 1095-B (from insurers) and 1095-C (from ALEs) – currently due on or before January 31

Applicable regulations also permit reporting entities to apply for a 30-day extension for good cause for providing Forms 1095-B and 1095-C to individuals, and provide authority for the Commissioner to issue guidance granting automatic 30-day extensions.

From 2015 to 2020, the IRS recognized the difficulty of a January 31 turn-around and issued temporary relief in the form of automatic 30-day extensions of the deadline to provide Forms 1095-B and 1095-C to individuals. See, e.g., IRS Notice 2020-76.  Although the temporary relief did not extend the deadline to file the required information to the IRS.

Proposed Extended Deadline for Forms 1095-B and 1095-C (to Individuals)

The proposed regulations would now make permanent and automatic the 30-day extension for Forms 1095-B and 1095-C – employers and insurance providers would not be required to demonstrate good cause.  No further extensions are contemplated – the good cause provision and the authority for the Commissioner to issue additional automatic extensions are eliminated. Similar to the previous temporary extensions, the proposed regulations do not extend the deadline to file this information with the IRS.

    Old Deadline New Deadline
Deadline to Distribute Forms to Employees and Other Covered Individuals

(Forms 1095-B and 1095-C)

  January 31, 2022

 

With possible 30-day extension for good cause upon application to the IRS

March 2, 2022
Deadline to File with the IRS

(Forms 1094-B and 1094-C)

  Paper: February 28, 2022

Electronic: March 31, 2022

(note: electronic filing is required if filing 250+ forms)

With possible 30-day extension upon application to the IRS using Form 8809

NO CHANGE

Alternative Methods of Furnishing Statements to Individuals

The proposed regulations would also codify and expand on previous temporary relief that provided alternative methods of complying with the requirements to furnish notices to individuals. Specifically, as long as the shared responsibility penalty remains at $0, reporting entities will be deemed to comply with the requirements to furnish notices to certain individuals if they timely post a “clear and conspicuous” notice on their website, through October 15, with contact information and an explanation of how the individual could receive a copy of the applicable form. If requested by an individual, the form must be furnished within 30 days.

This relief applies to ALEs, insurers and multiemployer plans as follows:

  • For ALEs: applies to the requirement to provide Forms 1095-C (and/or Forms 1095-B if the coverage is self-insured), but only with respect to non-full-time employees and non-employees enrolled in the self-insured plan. Thus, ALEs will still have to furnish the applicable forms to full-time employees in the traditional manner.
  • For insurers and multiemployer plans: applies to the requirement to provide Forms 1095-B to all covered individuals.

The relief does not change any of the requirements for reporting to the IRS. Thus, even if an ALE or plan that takes advantage of the relief, it will still have to complete Forms 1095-B and 1095-C in order to file them with the IRS.

Reporting entities should also be aware that, notwithstanding (and in some cases as a result of) the elimination of the penalty under the federal individual mandate, five states and Washington, D.C. have their own individual mandates and concomitant information reporting requirements.  Reporting entities should look to their particular state’s requirements because state information reporting requirements may not align with the federal guidance, including with respect to the requirement to send reporting forms to employees or other covered individuals.

Transitional Good Faith Relief Eliminated

The transitional good faith relief from penalties under Code Section 6721 and 6722 (i.e., the penalties for reporting incorrect or incomplete information on returns or individual statements) will not be extended for tax year 2021. The IRS concluded that this relief was no longer appropriate because the six years that the relief was in place provided sufficient time for reporting entities to familiarize themselves with the nuances of the reporting requirements.

Takeaways

Reporting entities may rely on the automatic extension relief for their 2021 reports, meaning Forms 1095-B and 1095-C must be provided to the applicable individuals no later than March 2, 2022 (no further extensions permitted).

Additionally, reporting entities may want to review their practices and consider the alternative methods of furnishing these forms where permitted, while also keeping in mind possible state law requirements.  In any case, the proposed regulations should not impact their practices with respect to filing ACA forms with the IRS.

Finally, reporting entities should carefully complete all forms and reach out to counsel if they have any questions, as they will no longer have the benefit of good faith relief from penalties if forms are inaccurate or incomplete.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Robert Projansky Robert Projansky

Robert M. Projansky is a partner in the Employee Benefits & Executive Compensation Group and is currently a member of the Firm’s Executive Committee.

Rob has a broad practice advising both multiemployer and single employer clients on all issues related to the legal…

Robert M. Projansky is a partner in the Employee Benefits & Executive Compensation Group and is currently a member of the Firm’s Executive Committee.

Rob has a broad practice advising both multiemployer and single employer clients on all issues related to the legal compliance and tax-qualification of ERISA-covered pension and welfare plans. Rob’s clients include the largest and highest-profile U.S. media and entertainment industry clients, as well as a broad range of Fortune 500 companies.

In the multiemployer context, he serves as counsel to the boards of trustees of a number of large and small funds and frequently assists clients in addressing issues related to the funding of defined benefit pension plans, including zone status, benefit suspensions, special financial assistance and withdrawal liability. He also advises these clients on healthcare compliance, cybersecurity and government investigations. In addition, his practice includes advising corporate clients on their responsibilities related to multiemployer plans, with particular expertise on the impact of multiemployer and collectively bargained plans in corporate transactions.

Rob has extensive experience advising corporate clients regarding general compliance issues and fiduciary compliance matters, including plan asset and prohibited transaction issues. He also has addressed a myriad of issues related to complex plan investments, including negotiation of separately managed and collective investment vehicles for both traditional and alternative investments such as hedge funds, private equity funds and fund-of-funds vehicles.

Rob is described in Chambers USA as “incredibly smart and creative, and a really effective, zealous advocate” who “adroitly communicates complicated ERISA matters to clients in understandable language and well-timed levity.”  He is a widely sought after speaker on topics related to employee benefits, fiduciary, cybersecurity and government investigations and speaks each year at the annual conference and various other conferences sponsored by the International Foundation of Employee Benefit Plans, the largest educational organization in the employee benefits industry. Rob currently serves as one of the nine Advisory Directors on the Board of Directors of the International Foundation.

Photo of Katrina McCann Katrina McCann

Katrina E. McCann is a senior counsel in the Tax Department and a member of the Employee Benefits & Executive Compensation Group.

Katrina advises a diverse group of clients on a broad spectrum of employee benefits matters, including:

  • counseling clients with respect to

Katrina E. McCann is a senior counsel in the Tax Department and a member of the Employee Benefits & Executive Compensation Group.

Katrina advises a diverse group of clients on a broad spectrum of employee benefits matters, including:

  • counseling clients with respect to the design, drafting, implementation and ongoing qualification of their qualified plans in both the single and multi-employer context, including profit sharing, money purchase, 401(k), ESOP, and defined benefit plans;
  • providing counsel on the establishment, administration and continued legal compliance of health & welfare plans and programs;
  • advising tax-exempt organizations regarding their 403(b) plans and 457 arrangements;
  • creating and advising on non-qualified plans, including deferred compensation and supplemental employee retirement plans;
  • providing technical and practical advice on compliance with ERISA, the Internal Revenue Code, the Affordable Care Act, COBRA, HIPAA, and other laws affecting employee benefit plans, as well as issues concerning plan administration, qualification requirements, correction of plan document failures, fiduciary issues and prohibited transaction issues;
  • routinely working with clients and their service providers, advising on the RFP process, reviewing provider arrangements and collaborating to develop effective and compliant disclosures, government reporting forms and participant communications;
  • analyzing the employee benefits and executive compensation issues in connection with corporate transactions, advising on withdrawal liability matters and structuring benefit plans following a transaction and providing counsel with respect to all aspects of benefit plan mergers; and
  • advising both employers and senior executives in connection with various executive compensation matters, including the negotiation and drafting of equity plans and awards, employment agreements, severance agreements and other compensation arrangements.

Katrina is a member and former co-chair of Proskauer Women’s Alliance Steering Committee and serves on the Firm’s Reproductive Rights Steering Committee. She is also a Board member of Playwrights Horizons, an off-Broadway theater dedicated to the development of contemporary American playwrights and the production of innovative new work, and a Board member of the Axe-Houghton Foundation.

Prior to joining Proskauer, Katrina served as Special Assistant to the Mayor’s Office of Pension and Investments and was Special Assistant Corporation Counsel, Pensions Division, New York City Law Department. While in law school, Katrina was the Robert M. LaFollette/Keenan Peck Legal Fellow, serving in the offices of Senator Herb Kohl & the United States Senate Committee on the Judiciary.

Photo of Mary Grace Richardson Mary Grace Richardson

Mary Grace Richardson is an associate in the Labor & Employment Department and a member of the Employee Benefits & Executive Compensation Group.

In the employee benefits area, Mary Grace’s practice focuses on an array of tax and benefits issues impacting both multiemployer…

Mary Grace Richardson is an associate in the Labor & Employment Department and a member of the Employee Benefits & Executive Compensation Group.

In the employee benefits area, Mary Grace’s practice focuses on an array of tax and benefits issues impacting both multiemployer and single-employer benefit plans and plan fiduciaries. She assists clients on matters pertaining to plan administration, design and qualification, as well as regulatory, legislative and legal compliance.

Prior to joining Proskauer, Mary Grace clerked for Chief Judge S. Maurice Hicks, Jr. in the United States District Court for the Western District of Louisiana.

Mary Grace received her J.D. and diploma in comparative law, magna cum laude, from Louisiana State University Paul M. Hebert Law School. At LSU, she served as a senior editor of the Louisiana Law Review and was a member of the Order of the Coif.