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Final IRS Regulations Provide Permanent Automatic Extensions for ACA Reporting

Final IRS Regulations Provide Permanent Automatic Extensions for ACA Reporting

Key Points

  • Final IRS rules permanently extend annual deadline for providing Forms 1095-C to employees to March 2, effective for calendar years beginning with 2022
  • Deadline for filing Forms 1095-C with IRS is unchanged
  • Final rules confirm "transitional" penalty relief is discontinued after 2020

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 annual deadline for providing the forms to employees. On December 12, 2022, the IRS issued final regulations to permanently extend the deadline for providing Form 1095-C to employees to March 2, for offers of coverage in the prior year. As with proposed regulations issued in November 2021, the final regulations do 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.

Deadline for Furnishing Forms to Employees

The final regulations require that employees receive their Forms 1095-C no later than March 2 for offers of coverage made in the prior year. This provides a permanent, automatic extension of the statutory due date of January 31, and is consistent with the automatic 30-day extension granted by the IRS each year from 2015-2020 through a series of IRS Notices.

Confirmation that Transitional Penalty Relief Has Been Discontinued

  • In past years, the IRS provided "transitional" good-faith penalty relief for employers that failed to meet the reporting requirements due to incorrect or incomplete reporting. The IRS confirmed in the final regulations that the good faith relief was discontinued after 2020, which the IRS views as appropriate, given that the reporting requirements have now been in place for seven years. However, the IRS emphasized that employers may continue to rely on the "reasonable cause" exception, which provides relief from penalties for failing to timely or accurately complete their reporting requirements, if the failure is due to reasonable cause and not to willful neglect.
  • 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 $290 per form for 2023, capped at a maximum of $3,532,500 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 2022.

Alternative Method of Furnishing Forms to Covered Part-time Employees and Non-Employees

Large employers that offer self-insured health coverage to part-time employees and nonemployees who enroll in the coverage may use Form 1095-B, rather than Form 1095-C, to report coverage for those individuals and other family members. The final regulations permit such employers to post a "clear and conspicuous" notice on the employer's public website with information about requesting the form. Upon receipt of an individual's request, the employer would be required to provide the form within 30 days.

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

For More Information, Please Contact:

Elizabeth Masson
Elizabeth Masson
San Francisco, CA
Soohuen Ham is an attorney at Hanson Bridgett LLP
Soohuen Ham
San Francisco, CA