An IRS Holiday Gift: 2019 Affordable Care Act Reporting Relief
The Internal Revenue Service (IRS) issued Notice 2019-63 on December 2, 2019 providing some relief from Affordable Care Act (ACA) reporting requirements. The notice provides relief consistent with that provided in the past year as well as new relief due to the $0 ACA individual mandate penalty changes.
Relief Regarding the Requirement to Furnish 2019 Form 1095-B
Because 2019 is the first year that the individual penalty for not having health insurance is $0, individuals will not need the information in Form 1095-B to file their individual taxes. As a result, the IRS has granted relief to reporting entities that fail to issue a Form 1095-B to covered individuals if two specific requirements are met. First, the reporting entity must post a notice on its website stating that individuals may receive a copy of their 2019 Form 1095-B upon request, along with an email and physical address to which requests may be sent and a telephone number that individuals can contact with questions. Second, the reporting entity must furnish the 2019 Form 1095-B in response to such a request within 30 days of receiving the request.
This relief does not broadly extend to applicable large employers that offer self-funded plans and use Form 1095-C to report coverage. Such employers must continue to issue Form 1095-C to all full-time employees. The relief does apply to the requirement to issue 2019 Forms 1095-C to employees who are not full-time employees for any month in 2019 (for example, part-time employees; retirees; Consolidated Omnibus Budget Reconciliation Act beneficiaries; 414(n) leased employees; and nonemployee partners, two percent S corporation shareholders, and LLC managing members).
Extension of Due Date to Issue 2019 Forms 1095-B and 1095-C
As it has every year since the ACA became law, the IRS has provided an extension of time to issue Forms 1095-B and 1095-C. Employers now have until March 2, 2020, to furnish full-time employees with 2019 Forms 1095-C. The IRS also announced that it will not grant any additional 30-day extensions for these forms or respond to any requests for such extensions.
Please note that insurers and employers are still required to file all 2019 Forms 1094-B, 1095-B, 1094-C, and 1095-C with the IRS by February 28, 2020, for paper forms or March 31, 2020, for electronic forms, regardless of any penalty relief for failing to furnish forms to covered individuals. Reporting entities are still able to request automatic extensions for filing via Form 8809.
Extension of Good-Faith Relief
The IRS also granted an extension of good faith penalty relief for 2019 Forms 1095-B and 1095-C. The relief applies to incomplete or inaccurate information in forms that have been timely filed or furnished. In determining good faith compliance efforts, the IRS considers whether employers or insurers made reasonable efforts to fulfill the reporting requirements.
This guidance provides welcome relief for health plan sponsors and issuers. However, because the IRS has been more aggressive recently in sending Letters 226J for ACA reporting failures and in assessing ACA-related penalties, plan sponsors may want to take particular care to properly prepare the forms, distribute them to participants (as required subject to the above-described relief), and timely file them with the IRS.