Changes to Employer Health Coverage Reporting Under the ACA 

January, 2022 - Elizabeth Masson

Key Points

  • New IRS rules extend annual deadline for providing Forms 1095-C to employees to March 2
  • Penalty relief no longer applies for employers that make good faith efforts to comply with reporting requirements
  • California employers with self-insured plans must file Forms 1095-C with the Franchise Tax Board by March 31

Under the Affordable Care Act (“ACA”), large employers (generally those with 50 or more full-time employees or full-time equivalents) must report annually to the IRS information about the health coverage offered to their full-time employees during the prior year using IRS Form 1095-C. The IRS uses the forms to assess whether an employer "shared responsibility" penalty applies. Employers also must provide copies of the forms to their full-time employees.


In past years, the IRS has extended the deadline for providing the forms to employees. The IRS also provided “transitional” penalty relief for incorrect or incomplete reporting, for employers that met the deadlines and made a good faith effort to comply.


New Rules Would Permanently Extend Deadline for Furnishing Forms to Employees and End Transitional Penalty Relief

On November 22, 2021, the IRS released proposed regulations that would permanently extend the deadline for providing Forms 1095-C to employees from January 31 to March 2, for offers of coverage made in the prior year. The new rules would not change the deadline for filing the forms with the IRS, which is March 31, for employers that file electronically, and February 28, for employers that file paper forms. The new rules also confirm the end of the “transitional” good-faith penalty relief, as announced by the IRS in 2020. However, penalty relief remains available for employers that have reasonable cause for failing to timely or accurately complete their reporting requirements.


New Rules Would Provide Alternative Method of Furnishing Forms to Covered Part-Time Employees and Non-Employees

For employers with self-insured coverage, the proposed rules also provide an alternative method of furnishing Forms 1095-C to part-time employees and non-employees enrolled in the employer’s coverage. This requires posting a "clear and conspicuous" notice on the employer’s public website with information about requesting the form and providing the form within 30 days after receipt of an individual's request.


Federal Deadlines for Forms Reporting Coverage Provided in 2021

The new rules have not been finalized, but employers may rely on them for calendar years beginning with 2021. Accordingly, the 2021 deadlines for 1095-C forms are:


Furnishing of 2021 Forms 1095-C to employees March 2, 2022
Paper filing of 2021 forms with the IRS February 28, 2022
Electronic filing of 2021 forms with the IRS (mandatory for employers submitting 250 or more) March 31, 2022

 


Penalties for Failure to Timely File Complete and Accurate Forms

Generally, an employer that fails to file, or files incomplete or incorrect Forms 1095-C with the IRS may be subject to a penalty of up to $280 per form for 2022, capped at a maximum of $3,426,000 or a higher amount, if the IRS determines that the failure was due to the employer's intentional disregard of the filing requirement. Similar penalties apply for a failure to provide complete and correct copies of the forms to employees.


The IRS has released final instructions for completing Forms 1094-C and 1095-C for coverage provided in 2021 that reflect the changes in the proposed rules.


Employer Reporting Requirements for California's Individual Mandate

Under California's “individual mandate” rules, employers offering coverage to California residents through a self-insured plan must file Forms 1095-C with the Franchise Tax Board (FTB) by March 31 following the end of the plan year. Although employers may be subject to a penalty of $50 per individual for failing to comply, the FTB has announced that no penalty will be imposed for forms that are filed before May 31. Employers offering coverage only through a fully insured plan are not required to submit reporting to the FTB, so long as their insurer submits the applicable forms to the FTB.


If you have any questions regarding the reporting requirements under the ACA, please contact a member of the Hanson Bridgett Employee Benefits Group.


 



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