The IRS released proposed regulations which, when finalized, will allow changes to the method of distributing Form 1095-B to covered individuals. Insurers and other coverage providers (such as self funded health plans) may rely on the proposed regulations immediately.
Health insurers and coverage providers furnish form 1095-B to covered individuals in order for those individuals to have documentation of health coverage enrollment. When ACA was enacted, it included an ‘individual mandate’ requiring virtually all Americans to have health coverage or pay a tax penalty for not having coverage. This tax penalty was reduced to $0.00 starting with the 2019 tax year, thereby eliminating the individual mandate. Without an individual mandate, and without a need for individuals to document having health coverage, Form 1095-B became of limited use.
The proposed regulations permanently extend an earlier IRS change to the distribution of Form 1095-B when the individual mandate remains $0. A reporting entity does not have to furnish Form 1095-B to the individuals it covers if (a) the reporting entity posts a clear and conspicuous notice on its website saying individuals may get a copy of Form 1095-B upon request and (b) a Form 1095-B is furnished within 30 days of receiving a request.
The website notice must include an email address, a physical address to which a request may be sent, and a telephone number that responsible individuals may use to contact the reporting entity with questions. The notice must be retained on the website until October 15 of the year following the tax year to which the statement relates. To be considered “clear and conspicuous,” the website notice must be reasonably accessible by individuals who may search the entity’s website for tax information. The notice must be written in plain, non-technical terms and with letters of a font size large enough (including any visual clues or graphical figures) to call to a viewer’s attention that the information pertains to tax statements reporting that individuals had health coverage.
The proposed regulations give the following example. A reporting entity’s website that includes a statement on the main page, or a link on the main page, reading “Tax Information,” to a secondary page that includes a statement, in capital letters, “IMPORTANT HEALTH COVERAGE TAX DOCUMENTS;” explains how responsible individuals may request a copy of Form 1095-B, Health Coverage, or Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, as applicable; and includes the reporting entity’s email address, mailing address, and telephone number, will be considered “clear and conspicuous notice.”
There is no alternative posting method provided for furnishing Form 1095-C to full-time employees showing offers of coverage. Form 1095-C must continue to be mailed or electronically delivered to full-time employees. However, if a self-funded ALE uses Form 1095-C to document coverage to covered individuals who are not full-time employees, the alternative posting method described above for Form 1095-B may be used for the non-full-time individuals.
Form 1094-B and C still must be transmitted to the IRS as in prior years.
The alternative furnishing method may be welcome news for many reporting entities. Before taking advantage of the alternative method for providing Form 1095-B (and limited application of Form 1095-C), reporting entities should make sure they are not required under any state law to actually mail or e-deliver a 1095-B form. A few states with ACA-like requirements may require actual distribution of coverage documentation.
