December 03, 2019
The Internal Revenue Service (IRS) has released Notice 2019-63, extending the due date for insurers, self-insured employers, other providers of minimum essential coverage and employers with 50 or more full-time equivalent employees (Applicable Large Employer, or ALE) to provide Form 1095-B (“Health Coverage”) and/or Form 1095-C (“Employer Provided Health Insurance Offer and Coverage”) to applicable individuals, from January 31, 2020 to March 2, 2020.
In addition, the IRS has extended good-faith transition relief from penalties under Internal Revenue Code (Code) Sections 6721 and 6722 with respect the 2019 information reporting requirements under Code Sections 6055 and 6056. Furthermore, if certain conditions are met, relief is also provided from penalties under Code Section 6722 for failure to furnish a statement under Code Section 6055 as a result of the individual shared responsibility payment being reduced to zero in 2019.
The deadline extension to furnish Forms 1095-B and 1095-C is automatic. Employers and providers do not have to request it. However, Notice 2019-63 does not extend the due date for filing forms with the IRS for 2019. The due date for filing with the IRS under Code Sections 6055 and 6056 remains February 28, 2020 (March 31, 2020, if filing electronically).
Under Code Section 6055, health insurance issuers, self-insuring employers, government agencies, and other providers of minimum essential coverage are required to file an annual return with the IRS reporting information for each individual that is provided with this coverage to substantiate their compliance with the individual mandate provision under the Affordable Care Act (ACA). Related statements must also be provided to these individuals. The mechanism used for fulfilling the reporting and disclosure requirements under Code Section 6055 is Form 1095-B.
Under Code Section 6056, most ALEs are required to report information to the IRS and provide statements to its full-time employees regarding the employer-sponsored health coverage they were offered. The IRS will use the information that ALEs report to verify employer-sponsored coverage and to administer the ACA’s employer shared responsibility provisions. The mechanism used for fulfilling the reporting and disclosure requirements under Code Section 6056 is Form 1095-C.
To simplify the reporting process, the IRS permits ALEs with self-insured plans to use a single combined form for reporting the information required under both Code Sections 6055 and 6056.
Written statements must be provided to employees no later than January 31 of the year following the calendar year in which coverage was provided. Thus, Notice 2019-63 extends the deadline to furnish the 2019 statements from January 31, 2020 to March 2, 2020.
Returns must be filed with the IRS by February 28 (or by March 31, if filed electronically) of the year after the calendar year to which the returns relate. This means that the returns for the 2019 information year are due to the IRS on or before February 28, 2020, or by March 31, 2020, if filed electronically. The IRS has not extended these deadlines.
Employers and other coverage providers that do not comply with the March 2, 2020 extended due date for furnishing Forms 1095-B and 1095-C, or who fail to comply with the related IRS reporting requirements are subject to penalties for either failing to file correct information returns (under Code Section 6721) and/or failing to furnish correct payee statements (under Code Section 6722).
Notice 2019-63 extends transition relief from these penalties to the 2019 reporting year as long as the reporting entity can show that they made a good faith effort to comply with Code Sections 6055 and 6056, both for furnishing statements to individuals and for filing with the IRS. The relief applies to missing and inaccurate taxpayer identification numbers and dates of birth, as well as other required information. It does not apply to reporting entities that do not make a good-faith effort to comply with the regulations or fail to file an information return or furnish a statement by the due dates (as extended). In determining good faith, the IRS will take into account whether the employer or other reporting entity made reasonable efforts to prepare for reporting and furnishing the required information to the IRS, such as gathering and transmitting the necessary data to an agent to prepare the data for filing, or testing its ability to transmit information to the IRS.
Additional Form 1095-B Relief
Because the individual shared responsibility penalty is reduced to zero in 2019 for federal taxation purposes, an individual doesn’t need the information on the Form 1095-B to compute his or her federal tax liability or file an income tax return with the IRS. In this respect, the IRS has determined that it will not assess a penalty under Code Section 6722 against reporting entities for failing to furnish a Form 1095-B as long as they (1) post a notice prominently on their website stating that responsible individuals may receive a copy of the 2019 Form 1095-B upon request that includes an email address and a physical address to which a request may be sent, along with a contact telephone number; and (2) furnish the Form 1095-B within 30 days of the date the request is received.
For all intents and purposes, the recipients of a Form 1095-B will be enrollees in a fully insured health plan or policy and the reporting entity required to file the Form 1095-B will be insurer. ALEs that offer self-insured health plans use Form 1095-C, Part III to meet the Code Section 6055 requirements, instead of the Form 1095-B. However, because of the combined reporting under Code sections 6056 and 6055 on the Form 1095-C for full-time employees of ALE members enrolled in self-insured health plans, the relief does not extend to the requirement to furnish Forms 1095-C to full-time employees. Thus, for full-time employees enrolled in self-insured health plans, penalties will continue to be assessed consistent with prior enforcement policies for any failure by ALE members to furnish Form 1095-C, including Part III, according to the applicable instructions. However, the 2019 Code section 6055 furnishing relief does extend to penalty assessments in connection with the requirement to furnish the Form 1095-C to any employee enrolled in an ALE member’s self-insured health plan who is not a full-time employee for any month of 2019.
The IRS is encouraging reporting entities to furnish statements as soon as they are able. No request or other documentation is required to take advantage of the extended deadline.
For More Information
For more information about this ACA Pathways or about any other health care reform-related provisions, please contact your Burnham Benefits consultant or Burnham Benefits at:
Burnham Benefits does not engage in the practice of law and this publication should not be construed as the providing of legal advice or a legal opinion of any kind. The consulting advice we provide is intended solely to assist in assessing its compliance with the Patient Protection and Affordable Care Act and other applicable federal and state law requirements, and is based on Burnham Benefit’s interpretation of federal guidance in effect as of the date of this publication. To the best of our knowledge, the information provided herein, and assumptions relied on, are reasonable and accurate as of the date of this publication. Furthermore, to ensure compliance with IRS Circular 230, any tax advice contained in this publication is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.