On December 12, 2022, the Internal Revenue Service (IRS) released final regulations providing employers an automatic, 30-day extension of the deadline to furnish individual statements for Forms 1095-B and 1095-C under the Affordable Care Act (ACA) along with several additional changes to ACA reporting requirements.
These final regulations replace the proposed regulations issued in 2021, with minimal changes, and are effective from December 15, 2022.
Extension of Forms Deadline
Since the inception of the ACA reporting in 2015, the IRS has on numerous occasions extended the annual January 31 deadline for Applicable Large Employers (ALEs) and insurers to provide the forms to individuals. These final regulations will permanently extend this deadline to furnish these forms to March 2 of each year (or the next business day if March 2 falls on a weekend or holiday).
For the 2022 forms, due in 2023, the deadline was already extended from January 31, 2023 to March 2, 2023.
These final regulations extending the deadline for furnishing forms does not extend for filing these forms, along with the applicable Forms 1094-C or 1095-C with the IRS. Those dates remain the same: February 28 (for paper filing) and March 31 (for electronic filing).
Alternative Method of Furnishing Form 1095-B
The final regulations also allow certain reporting entities to use an alternative method for furnishing Form 1095-B to certain plan participants. The ACA reporting entities that may use this alternative method include:
- ALE self-funded plan sponsors for plan participants who are part-time employees and non-employees (such as COBRA enrollees or retirees). This information may be provided on Form 1095-C by your reporting administrator.
- Non-ALE self-funded or level-funded plan sponsors (e.g., for self-funded, those sponsors of an Individual Coverage HRA (ICHRA)) and health insurance carriers that provide Form 1095-B to their plan participants (as proof of minimum essential coverage).
This alternative method requires these ACA reporting entities to:
Post a clear and conspicuous notice on its website by March 2 and retain in the same location until October 15 of the next plan year. The notice must include an email address, a mailing address, and a telephone number for individuals to contact with questions along with informing these individuals how they may request a copy of their individual form. The notice must be written in plain terms and in a font size large enough to signal to the reader that the information pertains to health coverage tax statements.
The final regulations provide a “safe harbor” example for reporting entities to satisfy this notice requirement (as outlined in the paragraph directly above) by also including a statement or link on the main web page with the words “Tax Information ” which links to a secondary web page with the words “IMPORTANT HEALTH COVERAGE TAX DOCUMENTS” in capital letters.
Provide the individual their form(s) within 30 days when requested by a plan participant. The form(s) may be provided electronically if the requesting participant consents to electronic receipt.
The intent of this alternative method is to reduce the administrative burden of ACA reporting for any tax years in which the individual mandate is $0 (as it is currently) since the forms are not required for these individuals to file their tax returns. This provision is subject to change if the individual mandate changes from $0.
ALEs with self-funded group health plans cannot rely on this alternative method to furnish forms to their full-time employees. This alternative method as stated above applies only to part-time and non-employees.
Steps for Employers
- Ensure the 2022 forms are furnished to individuals in advance of the March 2, 2023 deadline for full-time employees.
- Review the 2022 forms very carefully to ensure accuracy and completeness in an effort to avoid penalties as 2020 was the last year that the IRS (as previously confirmed) allowed this transitional good faith relief. The final regulations re-confirm the elimination of this relief for the 2021 plan year and subsequent years. This change could result in large penalties for incorrect or incomplete forms ($290 per return).
- Employers with employees in those states and local jurisdictions (California, Massachusetts, New Jersey, Rhode Island, and Washington, DC) that require proof of coverage for individual state mandates must continue to comply with those applicable rules and deadlines.
At TASC, we stay on top of the latest legislative developments to keep our customers informed about the rules and regulations impacting their benefits.
