While you were enjoying the last of the eggnog during your holiday break, the Internal Revenue Service (IRS) granted the wish of many who work in the benefits industry by postponing the Affordable Care Act (ACA) reporting deadlines for a few months. In Notice 2016-4, the IRS responded to the pleas of health plan sponsors and coverage providers for “additional time to adapt and implement systems and procedures to gather, analyze, and report this information.”
What Are the New Deadlines?
ACA requires health plan sponsors/employers and insurers to report health care coverage information both to the IRS and to employees using Forms 1094 and 1095. The first filing deadlines for this requirement were originally scheduled for the first quarter of 2016 to reflect coverage information for the 2015 calendar year. The old and new deadlines are as follows:
These new deadlines apply only to 2015 calendar year filings. For 2016 calendar years and beyond, the original schedule of deadlines will apply. Although the IRS is offering more time, regulators will accept filings beginning in January 2016 and encourage employers and other coverage providers to furnish the employee statements and file the information returns as soon as they are ready.
What If We Can’t Make the New Deadlines?
The new due dates are hard deadlines. Because of these across-the-board deadline extensions, the IRS will not accept or grant requests for additional extensions for 2015 calendar year filings. If a filer does not comply with these extended due dates, it is subject to penalties under Section 6722 or 6721 for failure to timely furnish and file. However, employers and other coverage providers that do not meet the extended due dates are still encouraged to furnish statements to employees and file with the IRS. Penalties may be adjusted for “reasonable cause.” The IRS will take into account whether an employer or other coverage provider made reasonable efforts to prepare for reporting the required information and is taking steps to ensure that it is able to comply with the reporting requirements for the 2016 calendar year. Therefore, it’s important for filers to keep track of their efforts to comply.
How Does the Delay Affect the Tax Returns of Individuals?
The health care coverage statements (Forms 1095-B and 1095-C) for employees were created for two purposes: 1) to confirm an individual’s eligibility for premium tax credits (subsidies) and 2) to verify that an individual had minimum essential coverage for the year and therefore does not have to pay the individual mandate penalty. The original deadline for these statements was the same as the deadline for W-2 Forms and therefore coordinated well with the process for individual tax returns. The delay interferes with that timing, and many individuals will not receive their 1095 forms before they file their 2015 tax returns. In response to this issue, the IRS says, for 2015 only, individuals are not required to include Form 1095 with their tax returns and may rely on “other information received from employers or coverage providers.” Also, individuals do not need to “amend their returns once they receive their Forms 1095-C or any corrected Forms 1095-C.” Instead, individuals should simply keep the 1095 forms with their tax records once they receive them.
Kelli Kolsrud, CEBS
Director, Information Services and Publications at the International Foundation