The Affordable Care Act (“ACA”) imposed additional reporting requirements on health insurers (including, for this purpose, self-funded employer plans) and “applicable large employers” (those with 50 or more full-time employees). Starting with the first year to which the reporting requirements applied (2015), the IRS has granted insurers and employers additional time to issue the appropriate ACA-reporting forms (Form 1095-B for insurers and Form 1095-C for employers). In Notice 2019-63, the IRS has again extended this reporting deadline for 2019. The Notice also extends the “good-faith compliance” standard and offers a special reporting option in response to the repeal of the penalty for failing to comply with the ACA’s individual coverage mandate.
Deadlines for Issuing Forms to Individuals and Filing with IRS
Rather than January 31, 2020, Forms 1095-B and 1095-C must now be provided to insureds or employees by March 2, 2020. Due to this automatic 30-day extension, the IRS will not even consider 30-day extension requests under the usual “good cause shown” standard.
As in recent years, the IRS has not extended the deadline for insurers and employers to transmit these ACA-reporting forms to the IRS – using either Form 1094-B (for insurers) or 1094-C (for employers). So insurers will still need to file their Forms 1094-B with the IRS by March 31, 2020, and employers will still need to file their Forms 1094-C by either February 28, 2020 (if done on paper), or March 31, 2020 (if done electronically). However, the IRS notes that the option of requesting a 30-day extension of time to make these IRS filings will remain available, by filing a Form 8809.
Extension of “Good-Faith Compliance” Standard
Moreover, the IRS has again extended the “good-faith compliance” standard. Insurers 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 in earlier years, however, this relief does not apply to missing or late filings. So insurers and employers should continue to work toward meeting these filing deadlines.
Relief Attributable to Repeal of Individual Mandate
As described below, there is one respect in which the relief granted in Notice 2019-63 goes beyond that granted in earlier years. This stems from the fact that Congress reduced to zero the penalty for failing to comply with the ACA’s individual coverage mandate during 2019 and later years. Because an insurer’s Form 1095-B is intended largely to help the IRS administer this individual mandate, the additional relief will primarily benefit insurers. However, the additional relief may also apply in a very limited respect to a self-funded employer’s reporting of coverage provided to part-time employees.
Notice 2019-63 provides that the IRS will not assess a penalty against an insurer for failing to issue a Form 1095-B to a covered individual if both of the following conditions are satisfied:
- The insurer posts a notice prominently on its website stating that covered individuals may receive a copy of their Form 1095-B upon request, along with an e-mail address and a physical address to which such requests may be sent and a telephone number to call with any questions; and
- Within 30 days of receiving such a request, the insurer furnishes a Form 1095-B.
The Notice makes clear, however, that this relief does not excuse an insurer’s obligation to file Forms 1095-B with the IRS – as attachments to the Form 1094-B. The IRS might want to have this coverage information to ensure that an individual does not receive a federal tax subsidy to purchase coverage through an Exchange for the same month in which he or she had the non-Exchange coverage. But that means an insurer will still need to collect the data needed to prepare the Forms 1095-B and then put that data into the proper format for electronic filing. As a result, this relief is more limited than might first appear.
Similar relief would apply to large employers sponsoring self-funded health plans. Those employers must issue a Form 1095-C to each employee who met the ACA’s “full-time” definition during any month of the year. But coverage provided to all employees who received coverage under that plan – including those who were only part-time – must be reported in Part III of a Form 1095-C.
Those employers – i.e., self-funded employers that cover part-time employees – might also benefit from this additional relief. As with insurers, such an employer would have to both:
- Post a notice prominently on its website stating that part-time employees who had self-funded health coverage may receive a copy of their Form 1095-C upon request, along with an e-mail address and a physical address to which such requests may be sent and a telephone number to call with any questions; and
- Furnish a Form 1095-C within 30 days of receiving such a request.
Such an employer would still need to issue Forms 1095-C to all employees who were full-time during any month of the year, with Part III completed to report any coverage they had received. The Notice warns that reporting penalties will continue to be assessed against employers that fail to comply with this requirement. Moreover, the employer would still need to prepare and file a Form 1095-C with the IRS for any part-time employee who had received the self-funded health coverage during any month of the year.
As a practical matter, this relief may lead insurers to elect not to issue Forms 1095-B to their insureds. However, large employers may find it easier to provide Forms 1095-C to their covered part-time employees at the same time that they issue those forms to their full-time employees – rather than generating the forms at a later date (upon a part-time employee’s request). This is particularly true in view of the fact that employers will still need to prepare Forms 1095-C for those part-time employees, in order to file them with the IRS. Employers may want to work with their ACA-reporting vendors to resolve this issue.
This blog post was drafted by Ken Mason, an attorney in the Spencer Fane LLP Overland Park, KS office. For more information, visit spencerfane.com.