IRS Extends Deadline for Employer 1094/1095 Reporting
In welcome news for most employers, the IRS announced in Notice 2016-4 that the deadlines for employers to report health care coverage information as required by the Affordable Care Act have been extended.
Background. All Applicable Large Employers (those with 50 or more full-time equivalent employees) must report on Forms 1095 and 1094 whether they offered affordable, minimum essential coverage at minimum value to employees (and their dependents) who were full-time for at least one month during 2015. In addition, any employer sponsoring a self-funded medical plan must report on Form 1095-C all employees who enroll under the plan (including part-time employees, COBRA participants, beneficiaries and directors).
A brief refresher on the reporting labyrinth:
- Form 1095-B reports coverage of employees by their employer’s health plan. This enables the IRS to monitor compliance with the ACA’s individual mandate. Note that this form must be filed in connection with any employer who sponsors a health plan, even if it is not an “Applicable Large Employer.” If a small employer’s plan is fully-insured, the insurer is responsible for Form 1095-B reporting. If a small employer’s plan is self-insured, the employer is responsible for Form 1095-B reporting. This form must be provided to employees (much like a W-2) and the IRS.
- Form 1095-C reports the extent to which Applicable Large Employers have provided ACA-compliant health care coverage to their employees. This enables the IRS to monitor compliance with the ACA’s employer mandate. These forms must be provided to employees (much like a W-2) and the IRS.
- Form 1094-B is the transmittal form that accompanies all Form 1095-B reporting for an employer to the IRS.
- Form 1094-C is the transmittal form that accompanies all Form 1095-C reporting for an Applicable Large Employer to the IRS. These Form 1094s are somewhat like cover sheets, and are not provided to employees.
The Extensions under IRS Notice 2016-4.
- The deadline to furnish Forms 1095-B and 1095-C to employees is extended from February 1, 2016 to March 31, 2016.
- The deadline for filing Forms 1094-B and 1094-C with the IRS is extended from February 29, 2016 to May 31, 2016 (if filing paper) or June 30, 2016 (if filing electronically).
- The Notice makes it clear that for 2015 individuals do not need to include Form 1095 with their individual tax returns.
- The Notice also provides that individuals may rely on “other information received from their coverage providers” to confirm that they have minimum essential coverage for 2015 or to demonstrate that they are eligible for a premium tax credit.
What Employers Should Think About.
- Communicate with payroll providers, tech-stakeholders and other ACA reporting partners about this development.
- Consider issuing “statements of coverage” that employees can keep with their tax records or show their tax preparer for purposes of premium tax credits and compliance with the individual mandate.
- Keep track of your compliance efforts. Records of these efforts may come in handy if you have trouble meeting even these extended deadlines.
- Don’t slow down. If you are on track to meet the original deadlines, do so and be done with this reporting obligation. Otherwise, you may waste more down time later ramping up again to meet the new deadlines, and your employees will appreciate receiving 1095 information well in advance of tax time.