On December 2, 2019 the IRS extended a key Affordable Care Act deadline - the due date for furnishing the 2019 Form 1095-B and Form 1095-C. The IRS also extended relief from penalties for errors on 2019 Forms 1094-B/C and Forms 1095-B/C if the entity made a good-faith effort to comply with the information reporting requirements.
Notice 2019-63 extends the due date for Form 1095-B/C distribution from January 31, 2020 to March 2, 2020. The extension is automatic and employers do not have to take action to get the timing relief. The Notice does not extend the date for transmitting Form 1094-B/C information to the IRS (February 28, 2020 for paper filing and March 31, 2020 for filing electronically).
The Notice announces a permitted change to the method for furnishing Form 1095-B to covered individuals. As background, health insurers and coverage providers furnish form 1095-B to covered individuals so the individuals may document having health coverage for the tax year. When ACA was enacted, it included an ‘individual mandate’ requiring virtually all Americans to have health coverage or satisfy a limited exemption from having health coverage. An individual would be subject to a tax penalty if he or she did not maintain proper coverage or satisfy an exemption. The tax penalty for not having health coverage was reduced to $0.00 for the 2019 tax year, thereby eliminating the individual mandate.
Form 1095-B, issued to individuals with health coverage, was intended to be used to document compliance with the individual mandate to avoid a tax penalty. Without an individual mandate, the IRS recognized the limited application of Form 1095-B.
While 1095-B Forms still must be produced as in prior years, the Notice announces permissible changes to the distribution of Form 1095-B to covered individuals. The guidance provides that for the 2019 tax year, no 1095-B form has to be furnished to individuals if (a) the reporting entity posts a 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, physical address and telephone number for making the request. A coverage provider is not required to take advantage of the distribution relief and may continue to distribute Form 1095-B as in prior years.
No relief is granted for furnishing Form 1095-C to full-time employees, and Form 1095-C must be produced and furnished to full-time employees as in prior years. An applicable large employer (ALE) uses Form 1095-C to document offers of health coverage and ALEs with a self-funded health plan use Form 1095-C to document actual coverage.
The Notice does provide employers limited relief for furnishing Form 1095-C to non-full-time employees. Form 1095-C must be produced, but it does not have to be furnished to a non-full-time employee if an employer follows the posting and request guidelines for the 1095-B forms described above.
Importantly, Form 1094-B and C still must be created and transmitted to the IRS as in prior years, and all 1095-B/C Forms still must be produced even if they are not mailed pursuant to the new relief guidance.
While the relief guidance is certainly interesting for coverage providers and ALEs, it may in practice have limited application. Some states have implemented their own individual mandates and ACA-like filing requirements. The two states with 2019 reporting requirements (New Jersey and District of Columbia), allow the federal Form 1095-B or 1095-C to show proof of coverage. Employers with residents in those states may wish to furnish the 1095-B/C forms as in prior years to satisfy state ACA-like obligations. Additional states have ACA-like requirements which go into effect in 2020.
Employers and health coverage providers who have health care reform filing obligations should review the new guidance and make decisions on their filing approach for the 2019 tax year.
A copy of Notice 2019-63 may be accessed by clicking here.
