On October 2, 2020, the IRS issued Notice 2020-76 (“Notice”), which automatically extends the employer deadline to distribute Forms 1095-B/C to plan participants from January 31, 2021 to March 2, 2021. In addition, the Notice extends the penalty relief for employers who fail to furnish Forms 1095-B and the penalty relief for good-faith errors in reporting, if certain requirements are met.
- The deadline to distribute Form 1095 is extended from January 31, 2021 to March 2, 2021.
- The deadline to file Affordable Care Act (ACA) reporting has not been extended and remains March 1, 2021 (for paper filing) and March 31, 2021 (for electronic filing).
- The IRS extends last year’s penalty relief for failing to distribute Forms 1095-B if employers post a notice on their website and furnish Forms 1095-B within 30 days of any request.
- The IRS will not impose penalties for “incorrect or incomplete” ACA reporting or form distribution if employers made good-faith efforts to comply. This penalty relief does not apply to employers who fail to file reporting or distribute forms on time.
Employers that sponsor self-insured group health plans (including level funded plans) and all “applicable large employers” or “ALEs” (employers with 50 or more full-time and full-time equivalent employees in the prior calendar year) must submit ACA reporting. Employers who file ACA reporting must also distribute copies of certain ACA reporting forms (1095-B or 1095-C) to employees for whom ACA reporting was submitted (“plan participants”).
The forms that employers must use to report depend on whether the employer is an ALE and whether they sponsor fully insured or self-insured plans (including level funded plans), as outlined below.
|Fully Insured Plans||Self-Insured/Level Funded Plans|
|Non-ALE||Not Required to File||File Forms 1094-B and 1095-B|
Distribute 1095-B to plan participants
|ALE||File Forms 1094-C and 1095-C (with Parts I and II of Form 1095-C Completed)|
Distribute 1095-C to full-time plan participants
|Forms 1094-C and 1095-C (with Parts I, II, and III of Form 1095-C Completed)|
Distribute 1095-C to plan participants
Deadline Extended for Distributing Forms 1095-B/C to Plan Participants
The IRS Notice extends the employer deadline to furnish Forms 1095-B/C to plan participants from January 31, 2021 to March 2, 2021. Since the IRS is automatically extending this deadline, the IRS will not formally respond to any employer request for a 30-day extension to furnish forms.
The deadline to file ACA reporting has not been extended and remains March 1, 2021 (for paper filing) and March 31, 2021 (for electronic filing). The amended deadlines for 2020 calendar year ACA reporting (which are filed in 2021) are outlined below:
|Employer Action Items||Deadlines|
|ACA Reporting (paper)||March 1, 2021|
|Distribute Forms 1095-B/C to plan participants (if vendor does not distribute on employer’s behalf)||March 2, 2021 (extended from January 31, 2021)|
|ACA Reporting (electronic)||March 31, 2021|
It is important to note that the deadline to distribute Forms 1095-B/C to individuals under the somewhat new California State Individual Mandate remains January 31, 2021 and is not automatically extended to coincide with the federal ACA distribution deadline. Thus, absent any distribution extension under California law, employers who are required to distribute Forms 1095-B/C under the federal ACA requirement and the California Individual Mandate should plan to distribute forms by the January 31, 2021 deadline. For more on the California Individual Mandate reporting requirements, see our blog.
Self-Insured Non-ALEs: Relief from Furnishing Form 1095-B to Individuals
For the second year in a row, the IRS will provide penalty relief for small self-insured (or level funded) employers who fail to distribute Form 1095-B to plan participants if the following two conditions are met:
- Employers must post a prominent notice on their website stating that individuals may receive a copy of their 2020 Form 1095-B upon request (the notice must be accompanied by an email address, phone number and a physical address to where the request can be sent); and
- Employers must furnish a 2020 Form 1095-B within 30 days of any request (these statements may be furnished electronically if the employer meets certain requirements, including obtaining affirmative consent to the electronic delivery, consistent with Treasury Regulation §1.6055-2).
This penalty relief applies to self-insured non-ALEs who are required to distribute Form 1095-B to plan participants. Further, this relief applies to self-insured ALEs who are required to distribute Form 1095-C to plan participants who are not full-time employees for any month in 2020. However, this penalty relief does not apply to ALEs’ (whether fully insured or self-insured) obligation to furnish Form 1095-C to full-time plan participants.
The relief from furnishing Form 1095-B does not extend to IRS ACA reporting. Applicable employers must still submit Forms 1095-B to the IRS, as applicable.
Final Extension of Good-Faith Relief for Incorrect or Incomplete Reporting
Consistent with past 2015 to 2019 ACA reporting, the IRS will not impose penalties on employers who show they made good-faith efforts to comply with ACA reporting and distribution requirements for 2020 reporting. The IRS states that this is the last time they intend to provide this good-faith relief.
The penalty relief applies to missing and inaccurate taxpayer identification numbers (TINs), dates of birth, as well as other information required on the ACA reporting. Employers must make good-faith efforts to comply to be eligible for this penalty relief. In determining whether an employer made a good faith effort, the IRS will consider whether the employer made reasonable attempts to prepare for reporting and distribution requirements (e.g., gathering and transmitting the necessary data to an agent or testing its ability to transmit information). It is important to note that the relief only applies to furnishing and filing “incorrect or incomplete” information, and not to a failure to furnish forms or file on time.
Employer Next Steps
Employers working with ACA reporting vendors will likely have no action item, as their vendor should be aware of the extended deadline to distribute Forms 1095. On the other hand, employers who are subject to the California Individual Mandate may want to work with their vendor to ensure that Forms 1095 are being distributed by the earlier California deadline of January 31, 2021.
Small self-insured or level funded employers may want to consider posting a notice (as outlined above) instead of distributing Forms 1095-B, if this distribution is not already being completed by their ACA reporting vendor.
Disclaimer: This content is intended for informational purposes only and should not be construed as legal, medical or tax advice. It provides general information and is not intended to encompass all compliance and legal obligations that may be applicable. This information and any questions as to your specific circumstances should be reviewed with your respective legal counsel and/or tax advisor as we do not provide legal or tax advice. Please note that this information may be subject to change based on legislative changes. © 2020 Sequoia Benefits & Insurance Services, LLC. All Rights Reserved