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IRS Provides 2020 ACA Reporting Relief

Oct 13, 2020 Decorative Image

Earlier this month the Internal Revenue Service (IRS) extended the due date for employers, insurers and other providers of minimum essential coverage to provide Forms 1095 to employees and other individuals. Notice 2020-76 extends the original due date by 30 days, from January 31, 2021, to March 2, 2021.

It is important to note that this may be the last year the IRS extends this due date. Last year the IRS requested comments as to whether this relief is still necessary and if so, why. Very few comments were submitted, which indicated to the IRS that this relief may no longer be necessary. The IRS is renewing its request for comments, and unless it receives comments that explain why this relief continues to be necessary, no relief related to the furnishing requirements will be granted in future years. Comments must be submitted to the IRS by February 1, 2021.

The due date for filing Forms 1094 and 1095 with the IRS is unchanged and remains March 1, 2021 (February 28, 2021, is a Sunday) or March 31, 2021, if filing electronically.

The IRS also extended, likely for the final time, the relief from penalties for filing incorrect or incomplete forms for those entities that can show they made good-faith efforts to comply. Examples of things that could qualify for this relief include missing or inaccurate taxpayer identification numbers and dates of birth. However, failing to meet the deadlines for furnishing forms to individuals or filing Forms with the IRS would generally not be eligible for relief from penalties.

Notice 2020-76 states that this good-faith relief was intended to be transitional relief. Therefore, this is the last year the IRS intends to provide this relief.

Some reporting entities (generally insurers) won’t need to furnish individuals with a Form 1095 this year. The Affordable Care Act (ACA) requires insurers and other providers of minimum essential coverage (including self-insured employers) to provide individuals with a Form 1095-B indicating which individuals had coverage for each month of the year. This was originally required to assist taxpayers with filing their individual tax returns. With the reduction of the individual mandate penalty to $0, taxpayers do not generally need this form in order to prepare their tax returns. Therefore, the IRS will not assess penalties to reporting entities for failing to provide covered individuals with Form 1095-B as long as two conditions are met:

• First, the reporting entity posts a notice prominently on its website stating that responsible individuals may receive a copy of their 2020 Form 1095-B upon request, accompanied by an email address and a physical address to which a request may be sent, as well as a telephone number that responsible individuals can use to contact the reporting entity with any questions.

• Second, the reporting entity furnishes a 2020 Form 1095-B to any responsible individual upon request within 30 days of the date the request is received.

Note that while these reporting entities do not need to furnish a Form 1095-B to covered individuals, they must still file the forms with the IRS by March 1, 2021 (February 28, 2021 is a Sunday), or March 31, 2021, if filing electronically.

Applicable large employers (ALEs) are still responsible for full reporting as it relates to their full-time employees. ALEs must continue to provide each full-time employee with a completed Form 1095-C by the extended due date of March 2, 2021. If the ALE is self-insured, Section III of Form 1095-C must be completed to indicate which individuals had coverage for each month of the year.

However, ALEs that provide coverage to individuals who are not full-time employees, such as part-time employees, COBRA participants or retirees, do not need to furnish a Form 1095 to those individuals, so long as the above two referenced conditions are met.

Reach out to your Hylant representative for further information.

The above information does not constitute advice. Always contact your employee benefits broker or trusted adviser for insurance-related questions.

Author Holly Wahl, Hylant Vice President, Employee Benefits Compliance Leader