The Affordable Care Act (“ACA”) imposed additional reporting requirements on health coverage providers (including self-funded employer plans) and “applicable large employers” (those with 50 or more full-time employees). In Notice 2016-70, the IRS has granted coverage providers and employers 30 more days to issue the appropriate ACA-reporting forms to their insureds and full-time employees for coverage provided during 2016. Rather than January 31, 2017, these Forms 1095-B and 1095-C will now be due by March 2, 2017. In addition, the IRS has extended by one year the period of “good-faith compliance” with these reporting rules. As of now, however, the IRS has not extended the deadline for coverage providers and employers to transmit these ACA-reporting forms to the IRS.
This is the second year such ACA reporting has been required. The usual deadline for issuing Forms 1095-B (to insureds) and 1095-C (to full-time employees) is January 31st of the following calendar year. Those Forms must then be transmitted to the IRS, using either Form 1094-B or 1094-C, by February 28th (if done on paper) or March 31st (if done electronically). As explained in our December 29, 2015, article, the IRS granted fairly generous extensions of these reporting deadlines for coverage provided during 2015.
Notice 2016-70 provides much more limited relief for 2016. The new deadline for issuing Forms 1095-B and 1095-C is exactly 30 days after the usual deadline. Hence, March 2nd. And due to this automatic 30-day extension, the IRS states that it will no longer grant extension requests submitted on Form 8809.
Unlike last year, the IRS has not (yet) extended the deadline for transmitting these ACA-reporting forms to the IRS. That means coverage providers will still need to file Forms 1094-B with the IRS by March 31, 2017, and that employers will still need to file Forms 1094-C by either February 28, 2017 (if done on paper), or March 31, 2017 (if filed electronically). However, the IRS notes that the option of requesting a 30-day extension of this deadline will remain available.
After repeatedly warning that last year’s “good-faith compliance” standard would not be available for 2016, the IRS has now reversed course. Coverage providers and employers that can show good-faith efforts to comply with these ACA-reporting requirements may avoid the substantial penalties that would otherwise apply. As with the relief granted for 2015, however, this relief does not apply to missing or late filings. So coverage providers and employers should continue to work toward meeting these filing deadlines.
Finally, employers may want to be prepared to answer questions from their employees who do not receive a Form 1095-B or 1095-C by the time they wish to file their personal tax returns. Employees may want these Forms either to show that they had “minimum essential coverage” (thereby avoiding the tax penalty for failing to meet the ACA’s individual mandate) or to qualify for a federal tax subsidy to purchase coverage through an Exchange. This IRS Notice explains that employees need not wait to receive these Forms, but may instead rely on other information provided by their employers. If an employer chooses to provide such information, their employees need not attach a copy to their tax returns. However, they should retain the information with their other tax-related records.