For likely the final time, the IRS has issued Notice 2020-76 extending by 30 days the 2021 deadline to furnish the 2020 Forms 1095-B and 1095-C to individuals. The Notice mirrors the same 30-day extensions for the past four years of ACA reporting.
However, the IRS added this year that unless it receives “comments that explain why this relief continues to be necessary,” the 30-day extension will not be available in future years.
The 2021 ACA reporting deadlines for the 2020 Forms are now as follows:
- 2020 Forms 1095-B and 1095-C: Deadline to Furnish to Individuals
Standard Due Date: January 31, 2021
Extended Due Date: March 2, 2021
- 2020 Forms 1094-B and 1094-C (+Copies of Forms 1095-B/1095-C):
Deadline to File with IRS by Paper
Standard Due Date: March 1, 2021 (February 28 is a Sunday)
- 2020 Forms 1094-B and 1094-C (+Copies of Forms 1095-B/1095-C)
Deadline to File with IRS Electronically (Required for 250 or More Returns)
Standard Due Date: March 31, 2021
In language identical to the extension from the last four years, the IRS states the reason for the 30-day extension is because they “have determined that a substantial number of employers, insurers, and other providers of minimum essential coverage need additional time beyond the January 31, 2021, due date to gather and analyze the information and prepare the 2020 Forms 1095-B and 1095-C to be furnished to individuals.”
The IRS will not accept any requests for extensions beyond this automatic 30-day extension of the deadline (i.e., beyond March 2, 2020) for furnishing the forms to individuals that applies to all employers.
As with the last four years, there was no extension to the standard deadline to file the Forms 1094-B and 1094-C (and copies of the Forms 1095-B and 1095-C), presumably because the IRS found no similar need. Extensions of those applicable filing deadlines remain available via Form 8809.
Effective Repeal of the ACA Individual Mandate Leads to Form 1095-B Relief for Carriers
The TCJA effectively repealed the ACA individual mandate by reducing the penalties to zero as of 2019. This means the Form 1095-B generally provided by the insurance carrier no longer has a clear reporting purpose under IRC §6055. Therefore, the Notice also continues from last year the section 6055 furnishing relief for insurance carriers furnishing the Form 1095-B.
As with last year, this “2020 section 6055 furnishing relief” provides that the IRS will not assess penalties for an insurance carrier’s failure to furnish Forms 1095-B to individuals under two conditions:
- The insurance carrier posts a notice prominently on its website stating that individuals may receive a copy of their 2020 Form 1095-B upon request (with relevant contact information); and
- The insurance carrier must furnish the 2020 Form 1095-B to any individual upon request within 30 days of the date it receives the request.
Important Note: This relief with respect to insurance carriers furnishing coverage information to individuals on the Form 1095-B does not apply to ALE employers reporting on the Form 1095-C. The ACA employer mandate remains fully in effect, and therefore so do the employer ACA reporting requirements via Form 1095-C. Employers sponsoring a self-insured medical plan are still required to complete Part III of the Form 1095-C for any full-time employee enrolled in that plan in 2020 (even though that information is related to the same §6055 reporting requirements).
As a reminder, California added its own state-based individual mandate beginning in 2020. It joins Massachusetts, New Jersey, Rhode Island, Vermont, and Washington D.C. as states with their own individual mandate that is separate from the now defunct ACA individual mandate.
The information provided by carriers on the Form 1095-B, or provided by employers in Part III of the Form 1095-C for a self-insured plan, will continue to remain relevant for many of these states (including California and New Jersey), which piggyback off the §6055 ACA reporting requirements for their state-based individual mandate.
Good Faith Standard Applies for Final Reporting Round
The IRS was more definitive in the Notice that it is providing a final extension of the good faith enforcement safe harbor from penalties (generally $270 per return) for the 2020 ACA reporting forms furnished and filed at the start of 2021.
The IRS stated that “this good-faith relief was intended to be transitional relief,” and therefore that “this is the last year the Treasury Department and the IRS intend to provide this relief.”
The good faith standard applies to incorrect or incomplete information on the ACA reporting forms. This includes missing and inaccurate SSNs and DOBs.
To take advantage of the extended transition relief, employers must make a good faith effort to comply and provide and furnish/file the forms by the deadlines set out above. So as with prior years, completing the ACA reporting by the applicable deadlines (including extensions) above takes on extra significance.
Employee Communication Materials
As a reminder, applicable large employers (ALEs) provide the Form 1095-C to individuals. If the plan is fully insured, the insurance carrier also provides the Form 1095-B to covered individuals (in addition to the Form 1095-C provided by the ALE) unless the carrier is taking advantage of the 2020 section 6055 furnishing relief described above.
If the plan is self-insured (including level funded), all of the ACA reporting information for ALEs is included in the Form 1095-C (i.e., such individuals will not receive a Form 1095-B).
Non-ALEs sponsoring a self-insured plan (including level funded) must provide covered individuals with the Form 1095-B (not the Form 1095-C).
The following communication materials address this complex reporting arrangement for employees in a short and straightforward manner:
- Employee Educational Infographics
- Employee Educational Video Summary
Future Years: Standard Rules Likely to Take Effect
It is likely that ACA reporting will finally have its standard due dates and penalty scheme in effect for the 2021 ACA reporting forms furnished and filed in 2022. Fortunately, employers will have had six seasons of ACA reporting experience under their belt by that point. The January 31, 2022 furnishing deadline will mirror the Form W-2 timeline with which employers and employees are of course already very familiar.
Perhaps more interesting is what will come of the §6055 coverage reporting requirements. This is the employee and dependent monthly enrollment information that is addressed in Part III of the Form 1095-C for an ALE sponsoring a self-insured plan, on a separate Form 1095-B prepared by the insurance carrier for a fully insured plan, or on the Form 1095-B for a non-ALE with a self-insured plan. It is still not clear what federal tax purpose that portion of the ACA reporting requirements serves after the TCJA’s effective repeal of the individual mandate, and therefore it seems possible there could be changes on that front (despite the IRS noting the lack of public comments received on the topic).
Disclaimer: The intent of this analysis is to provide the recipient with general information regarding the status of, and/or potential concerns related to, the recipient’s current employee benefits issues. This analysis does not necessarily fully address the recipient’s specific issue, and it should not be construed as, nor is it intended to provide, legal advice. Furthermore, this message does not establish an attorney-client relationship. Questions regarding specific issues should be addressed to the person(s) who provide legal advice to the recipient regarding employee benefits issues (e.g., the recipient’s general counsel or an attorney hired by the recipient who specializes in employee benefits law).