On December 15, 2022, the Internal Revenue Service (“IRS”) published final regulations that make permanent certain relief and changes relating to the Affordable Care Act (“ACA”) reporting requirements. Specifically, the final regulations (1) include an automatic 30-day extension for providing Forms 1095-B and 1095-C to covered individuals and employees, which would otherwise be due on January 31; (2) allow an alternative method of furnishing the forms to certain individuals, and; (3) eliminate prior good faith relief from penalties, which the IRS has been granting reporting entities whose ACA Forms were incomplete or inaccurate. The final regulations are consistent with the proposed regulations, discussed in detail in our earlier blog post.

The key changes made by the IRS in the final regulations are summarized below.

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

The Internal Revenue Code (the “Code”) requires insurance companies, self-insured plans, and applicable large employers (“ALEs,” generally those with 50+ full-time or full-time equivalent employees) to file annual statements with the IRS (via Forms 1094-B and 1094-C for insurance providers and ALEs, respectively). These forms detail the extent that employees and covered individuals were offered “minimal essential coverage” as defined in the ACA and must be distributed to applicable individuals before the annual deadline. The final regulations permanently extend the deadline to 30 days after January 31 (the original deadline) so that the new deadline is March 2 (or March 1 for leap years), codifying the IRS’s prior practice of granting temporary 30-day extensions each year. As with the temporary extensions, the final regulations do not extend the deadline for reporting entities to file Forms 1094-B and 1094-C with the IRS.

Alternative Method of Furnishing Forms 1095-B and 1095-C

The final regulations also codify the prior temporary relief that allowed an alternative method of furnishing the required forms to certain individuals. Specifically, as long as the shared responsibility penalty remains at $0, a reporting entity will be deemed to be in compliance with the requirement to furnish the forms if they post a “clear and conspicuous” notice on their website, through October 15 of the year following the calendar year to which the forms relate, stating that individuals may receive a copy of the form upon request. The website notice must include an explanation of how to obtain the form, as well as an email address, a physical address where the individual can send their request, and a telephone number where individuals can contact the reporting entity with questions. Additionally, the notice must be written in plain, non-technical terms and in a large enough font size to call to a viewer’s attention that the information pertains to tax statements reporting that individuals had health coverage. The reporting entity must furnish a copy of the form within 30 days of a request.

For ALEs, this relief only applies to the requirement to provide Forms 1095-C (and/or Forms 1095-B if the coverage is self-insured) 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, this relief applies to the requirement to provide Forms 1095-B to all covered individuals.

Transitional Good Faith Relief Eliminated

From 2015 through 2020, the IRS has provided reporting entities with transitional good faith relief from penalties for reporting incorrect or incomplete information on returns or individual statements if the entities could show that they made good faith efforts to comply with the requirements. Consistent with the discussion in the preamble to the proposed regulations, the final regulations state that this relief will not be extended for the tax year 2021 and beyond.

Takeaways

Reporting entities now have an additional 30 days to furnish the required forms to individuals each year (i.e., by March 2, 2023 for the 2022 forms).

Reporting entities should review their practices and consider the alternative method of furnishing the required forms, where permitted, while also keeping possible state law requirements in mind. Five states and Washington, D.C. have individual mandates and related information reporting requirements.

Finally, reporting entities should consult with counsel to ensure that they carefully complete all forms and resolve questions before filling them since the IRS will no longer grant good faith relief from penalties if forms are inaccurate or incomplete.

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Photo of Roberta Chevlowe Roberta Chevlowe

Roberta K. Chevlowe provides advice to employers and boards of trustees of multiemployer benefit plans on a broad range of issues relating to their retirement, health and other employee benefit plans. With three decades of experience practicing in this area, Roberta employs a…

Roberta K. Chevlowe provides advice to employers and boards of trustees of multiemployer benefit plans on a broad range of issues relating to their retirement, health and other employee benefit plans. With three decades of experience practicing in this area, Roberta employs a practical, business-minded approach to helping her clients comply with the various requirements imposed by ERISA, the Internal Revenue Code, COBRA, the Affordable Care Act and other federal and state laws affecting employee benefit programs. Roberta’s practice also includes advising clients in connection with benefit claim appeals, lawsuits and government audits; drafting plan documents, policies and employee communications materials; and negotiating with plan service providers.

Roberta is best known for her work in the area of COBRA compliance and for advising employers in connection with the benefits they provide to employees’ domestic partners and same-sex spouses. She is a co-author of The COBRA Handbook and lectures and publishes articles on a variety of employee benefits topics. In addition, Ms. Chevlowe is a leader of Proskauer’s Task Force on Reproductive Health Care Benefits.

Photo of Jesse T. Foley Jesse T. Foley

Jesse T. Foley is a labor associate and a member of the Employee Benefits & Executive Compensation Group.

Jesse has a diverse practice advising multiemployer and single-employer clients on all aspects related to the legal compliance and tax qualification of ERISA-covered pension and…

Jesse T. Foley is a labor associate and a member of the Employee Benefits & Executive Compensation Group.

Jesse has a diverse practice advising multiemployer and single-employer clients on all aspects related to the legal compliance and tax qualification of ERISA-covered pension and welfare plans, including the treatment of such plans in corporate financings and transactions.

In his multiemployer practice, he represents a number of funds, counseling Boards of Trustees on issues such as healthcare compliance, cybersecurity, government investigations, benefit suspensions, special financial assistance, and withdrawal liability.

In addition, Jesse advises private, public, and not-for-profit employers on all aspects of their non-qualified executive compensation arrangements.  Jesse regularly provides technical and practical advice on the establishment, administration, and continued legal compliance of deferred compensation and supplemental employee retirement plans.  As part of his practice, Jesse routinely negotiates and drafts equity plans and awards, employment agreements, severance agreements, and other compensation arrangements.

Jesse earned his J.D. degree from the University of Southern California, where he was a Senior Editor of the Southern California Law Review.  Jesse also frequently contributes to Proskauer’s Employee Benefits & Executive Compensation Blog.