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updated on 1/15/2016
Update: On Jan. 12, 2016, the IRS added new Q&A 30 and Q&A 32 to its Affordable Care Act (ACA) webpages. The new Q&As address the deadlines for reduced penalties for ACA information reporting corrections, expanding on the IRS’s announcement of extended due dates for ACA information reporting in Notice 2016-4, described below. The IRS indicated that it does not anticipate any additional extensions regarding ACA information reporting.
Employers subject to the Affordable Care Act’s 2015 information reporting requirements now have extra time to give forms to employees and to file them with the government.
In Notice 2016-4, issued by the IRS on Dec. 28, the agency extended these reporting deadlines:
Previous IRS Due Date
New IRS Due Date
Forms 1095-B and 1095-C were due to employees by Feb. 1, 2016
March 31, 2016
Forms 1094-B, 1095-B, 1094-C and 1095-C were required to be filed with the IRS if filing on paper by Feb. 29, 2016
May 31, 2016
Forms 1094-B, 1095-B, 1094-C and 1095-C were required to be filed with the IRS if filing electronically by March 31, 2016
June 30, 2016
Source: ADP, based on IRS Notice 2016-4.
• For furnishing employees with the 2015 Form 1095-B (Health Coverage) and Form 1095-C (Employer-Provided Health Insurance Offer and Coverage), the deadline has been extended from Feb. 1, 2016, to March 31, 2016.
•For filing with the IRS the 2015 Form 1094-B (Transmittal of Health Coverage Information Returns), Form 1095-B, Form 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns) and Form 1095-C, the deadline has been extended from Feb. 29, 2016, to May 31, 2016 if not filing electronically, and from March 31, 2016, to June 30, 2016 if filing electronically. Any employer filing 250 or more information returns during the calendar year must file the returns electronically. For employers with fewer than 250 returns, electronic filing is voluntary.
“Earlier guidance would have been preferred, but the last-minute relief will still be helpful for employers that have been working to understand the complexities of compiling all the information needed and completing the forms, or gathering the information needed to work with their reporting vendors,” said Ann Marie Breheny, a senior legislative adviser at Towers Watson in Arlington, Va.
The notice also provides guidance to employees who might not receive a Form 1095-B or Form 1095-C by the time they file their 2015 tax returns.
Which Employers Must Report?
Some of the reporting requirements apply to applicable large employers (ALEs) that employed 50 or more full-time and full-time-equivalent employees and are meant to show compliance with the shared-responsibility employer mandate. Other reporting requirements apply to all self-insured employers that provide minimum essential coverage. Employers may be subject to one or both sets of reporting requirements, depending on their size and the type of coverage they offer.
“ALEs are required to report information about the health coverage they offered or did not offer to certain employees in 2015. To meet this reporting requirement, the ALE will furnish Form 1095-C to the employee or former employee and file copies, along with transmittal Form 1094-C, with the IRS,” said Laura Kerkes, SHRM-SCP, chief knowledge officer at HR technology company ThinkHR in Pleasanton, Calif.
“Employers, regardless of size, that sponsored a self-funded health plan providing minimum essential coverage in 2015 are required to report coverage information about enrollees,” she explained. “To meet this reporting requirement, the employer will furnish Form 1095-B to the primary enrollee and file copies, along with transmittal Form 1094-B, with the IRS. Self-funded employers who also are ALEs may use Forms 1095-C and 1094-C in lieu of Forms 1095-B and 1094-B.”
Employer groups had been seeking filing extensions. Because instructions for filing the reporting forms were released late in the year, “employers have been struggling with logistical issues” related to reporting, said Chatrane Birbal, the Society for Human Resource Management’s senior advisor for government relations.
The IRS deadline extension “is appreciated and will provide employers relief,” she said. “The ACA reporting forms require specific information on each employee’s insurance coverage—and their spouse’s and dependents’, if applicable—such as employer identification number, taxpayer identification number, addresses, employee’s full-time status and length of full-time status, proof of minimal essential coverage offered, coverage dates, and employees’ share of coverage premium costs. Collecting required information to ensure accurate reporting is an administrative burden for employers.”
While HR professionals have the relevant data requested, she noted, “this information is not contained in a central repository. Most employers will have to use multiple sources to obtain the data necessary to complete the reporting forms, including their benefits carrier or broker, HR information system, payroll company, time-off tracking software and other sources.”
The administrative burden and penalties related to missed deadlines and incorrect filing “will inevitably add to the employer’s cost of providing benefits to employees,” she noted.
Similarly, the American Benefits Council, in a Dec. 24 letter to IRS Commissioner John Koskinen, wrote that employers “have expressed significant concerns about their ability to furnish accurate Forms 1095-C and Forms 1095-B to employees by the Feb. 1, 2016 deadline.”
“The data that needs to be reported—particularly on the Form 1095-C—relates to information that many employers did not previously maintain in a format that facilitated reporting,” said Kathryn Wilber, senior counsel for health policy at the council. “As a result, employers’ attempts to establish systems that can accommodate the reporting requirements have generated logistical complications and we continue to hear about new difficulties from employers on a regular basis.”.
The IRS said it is still prepared to accept filings of the information returns on Forms 1094-B, 1095-B, 1094-C and 1095-C beginning in January 2016. “Following consultation with stakeholders, however, the Department of the Treasury and the [IRS] have determined that some employers, insurers, and other providers of minimum essential coverage need additional time to adapt and implement systems and procedures to gather, analyze and report this information,” the IRS said in its notice. “Notwithstanding the extensions provided in this notice, employers and other coverage providers are encouraged to furnish statements and file the information returns as soon as they are ready.”
Employers that don’t comply with these extended due dates will be subject to penalties under ACA section 6722 or 6721 for failure to timely furnish and file, the IRS said. The agency added that even if employers or other coverage providers miss the extended due dates, they are still encouraged to furnish and file, “and the service will take such furnishing and filing into consideration when determining whether to abate penalties for reasonable cause.”
“The IRS said it will take a good-faith enforcement approach to this first year of reporting,” said Breheny. “As the deadlines approach, there have been many questions from reporting entities about these complex requirements and the systems involved, so this is a welcome development.”
Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow me on Twitter.
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