October 06, 2020
The Internal Revenue Services (IRS) has issued Notice 2020-76, 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 February 1, 2021 (as January 31, 2021 falls on a Sunday) to March 2, 2021.
In addition, the IRS extends for the last time, good-faith transition relief from penalties related to the 2020 information reporting requirements. It also provides certain penalty relief with respect to furnishing the Form 1095-B, but not the Form 1095-C for full-time employees. However, this relief does extend to the requirement to furnish the Form 1095-C to any non-full-time employees enrolled in an ALE’s self-insured health plan as long as the requirements for obtaining the relief are satisfied.
Notice 2020-76 does not extend the due date for filing forms with the IRS for 2020. The due date for filing the Forms 1095-B and C with the IRS remains March 1, 2021 (as February 28, 2021 falls on a Sunday), or March 31, 2021, if filing electronically. In addition, this Notice does not address the various state filing requirements to comply with individual mandate laws in those states.
Code sections 6055 and 6056 were added by the Affordable Care Act (ACA):
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.
As indicated above, for 2020, the deadline for furnishing the 2020 Form 1095-B and Form 1095-C has been extended from February 1, 2021 to March 2, 2021. Filers are not required to submit any request or other documentation to the IRS to take advantage of the extended furnishing due date, and because this extended furnishing deadline applies automatically to all reporting entities, the IRS will not grant additional extensions of time of up to 30 days to furnish Forms 1095-B and 1095-C. As a result, the IRS will not formally respond to any requests that have already been submitted for 30-day extensions of time to furnish statements for 2020.
Notice 2020-76 also provides a final extension of transition relief from penalties for providing incorrect or incomplete information to reporting entities that can show that they have made good-faith efforts to comply with Code sections 6055 and 6056 reporting requirements for 2020 (both for furnishing to individuals and for filing with the IRS). According to Notice 2020-76, this good-faith relief was intended to be transitional relief. Therefore, this is the last year that the IRS intends to provide this relief.
This relief applies to missing and inaccurate taxpayer identification numbers and dates of birth, as well as other information required on the return or statement. No relief is provided for reporting entities that do not make a good-faith effort to comply with the regulations, or who fail to file an information return or furnish a statement by the due dates (as extended), except as otherwise provided in Notice 2020-76.
In determining good faith, the IRS will take into account whether a reporting entity made reasonable efforts to prepare for reporting the required information to the IRS and furnishing it to individuals (such as gathering and transmitting the necessary data to an agent to prepare the data for submission to the IRS or testing its ability to transmit information to the IRS). The IRS will also take into account the extent to which the reporting entity made reasonable efforts to prepare for this reporting requirement, 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.
Because the individual shared responsibility payment is zero in 2020, an individual does not need the information on Form 1095-B to compute his or her federal tax liability or file an income tax return with the IRS. Instead they may rely on other information received from their employer or other coverage provider to substantiate they were eligible for a premium tax credit in the marketplace or had minimum essential coverage.
Accordingly, the IRS will not assess a penalty under Code section 6722 against reporting entities for failing to furnish a Form 1095-B to responsible individuals in cases where the following two conditions are met:
ALEs that offer self-insured health plans are generally required to use Form 1095-C, Part III, to meet the Code section 6055 reporting requirements, instead of Form 1095-B. This 2020 Code section 6055 furnishing penalty 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 ALEs to furnish Form 1095-C, including Part III, according to the applicable instructions. However, the 2020 Code section 6055 furnishing penalty relief does extend to the requirement to furnish the Form 1095-C to any non-full-time employees enrolled in an ALE’s self-insured health plan, subject penalty relief requirements.
The 2020 Code section 6055 furnishing penalty relief also does not affect the requirement or the deadline to file the 2020 Forms 1094-B, 1095-B, 1094-C or 1095-C, as applicable, with the IRS, or any state filing mandate.
The transitional relief provided under Notice 2020-76 applies only to IRS furnishing and filing requirements. To counter the effects of the ACA individual mandate going away, employers with employees residing in California, New Jersey, Rhode Island, Vermont, and the District of Columbia are now also subject to requirements similar to those under Code section 6055 to comply with individual mandate laws enacted. Massachusetts has had its own creditable coverage requirement since 2006. Strictly speaking, self-funded plans, in particular, will have additional reporting responsibilities as a result.
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.