The IRS recently released Notice 2019-63 (“Notice”), which extends the employer deadline to furnish Forms 1095-B/C to employees from January 31, 2020 to March 2, 2020. The deadline to submit Affordable Care Act (ACA) reporting has not changed and remains January 31, 2020 for paper filling and March 31, 2020 for electronic filing. The amended deadlines for 2019 ACA reporting are outlined below.

 

Employer Action Items Deadlines
File ACA reporting by paperFebruary 28, 2020
Distribute Forms 1095-B/C to employees (if vendor does not distribute on employer’s behalf)March 2, 2020 (extended from January 31, 2020)
File ACA reporting electronically (required for employers filing 250+ returns)March 31, 2020

 

The Notice also provides penalty relief for self-insured non-ALE small employers who fail to distribute Forms 1095-B to employees, but only if certain requirements are met. It also extends penalty relief for ACA reporting errors made in good faith, as discussed below.

 

Background

Employers that sponsor self-insured group health plans (including level funded plans) and all “applicable large employers” or “ALEs” (employers with 50 or more full-time and full-time equivalent employees in the prior calendar year) must submit ACA reporting. Employers who file ACA reporting must also distribute copies of certain ACA reporting forms (1095-B or 1095-C) to employees.

The forms that employers must use to report depend on whether the employer is a non-ALE or ALE and whether they sponsor fully or self-insured plans (including level funded plans), as outlined below.

 Fully-Insured Plans Self-Insured Plans (including Level Funded)
Non-ALENot Required to FileFile Forms 1094-B and 1095-B

Distribute 1095-B to employees

ALEFile Forms 1094-C and 1095-C (with Parts I and II of Form 1095-C Completed)

Distribute 1095-C to employees

Forms 1094-C and 1095-C (with Parts I, II, and III of Form 1095-C Completed)

Distribute 1095-C to employees

 

Deadline Extended for Distributing Forms 1095-B/C to Employees

The IRS Notice extends the employer deadline to furnish Forms 1095-B/C to employees from January 31, 2020 to March 2, 2020. The IRS will not grant any requests for 30-day extensions past the new March 2, 2020 deadline for distributing these forms.

The Notice does not extend the employer deadline to file Forms 1094-B/C and Forms 1095-B/C to the IRS. The deadline to submit ACA reporting remains January 31, 2020 for paper filling or March 31, 2020 for electronic filing. For more on ACA reporting requirements, see our blog article.

 

Extension of Transition Relief for ACA Reporting Errors Made in Good Faith

Consistent with 2015 to 2018 ACA reporting, the IRS will continue to not impose penalties on employers who show they made good-faith efforts to comply with ACA reporting requirements for the 2019 reporting.

In determining whether an employer made a good faith effort, the IRS will consider whether the employer made reasonable attempts to comply with the requirements (e.g., gathering and transmitting the necessary data to an agent or testing its ability to transmit information) and took steps to prepare for next year’s reporting.

It is important to note that the relief only applies to furnishing and filing incorrect or incomplete information, and not to a failure to furnish or file on time. If an employer does file a late return, they may be able to receive penalty abatement if the failure is due to reasonable cause and not willful neglect by the employer.

 

Self-Insured Non-ALEs: Relief from Furnishing Form 1095-B to Individuals

For the first time, the IRS will provide penalty relief for small self-insured (or level funded) employers who fail to distribute Form 1095-B to employees if the following steps are taken.

  • Employer must post a prominent notice on its website stating that individuals may receive a copy of their 2019 Form 1095-B upon request (the notice must be accompanied by an email address, phone number and a physical address to where the request can be sent); and
  • furnish an individual with a Form 1095-B within 30 days of any request.

This penalty relief would only apply to self-insured non-ALEs who are required to distribute Form 1095-B to plan participants. As such, this penalty relief would not apply to ALEs, who are still required to furnish Form 1095-C to their full-time employees.

The relief from furnishing Form 1095-B does not extend to IRS reporting. Applicable employers must still submit Forms 1095-B to the IRS, as applicable. The Notice provides this relief only for 2019 reporting, and it is unclear whether it will apply to subsequent years.

 

Employer Action Items:

  • Employers must submit ACA reporting by January 31, 2020 for paper filling and March 31, 2020 for electronic filing.
  • Employers who submit ACA reporting must distribute Forms 1095-B or 1095-C (as applicable) to employees by March 2, 2020.
  • Non-ALE self-insured employers may decide not to provide employees with 1095-B forms and instead they may post proper notice to their website and provide the forms to employees upon request.
  • Employers should work with their ACA reporting vendor to obtain copies of Forms 1095-B or 1095-C, as needed. Some vendors may also assist the employer with distributing the appropriate forms to employees (although the ultimate responsibility remains with the plan sponsor to ensure the forms are received).

 

The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog.

Emerald Law – Emerald is a Client Compliance Consultant for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Emerald enjoys stand-up comedy, live music and writing non-fiction.