Recently, the IRS announced that it is extending one of the deadlines for providing 2016 Affordable Care Act (ACA) information statements to recipients. Specifically, the due date for furnishing to individuals the 2016 Form 1095-B (Health Coverage) and the 2016 Form 1095-C, (Employer-Provided Health Insurance Offer and Coverage) is extended from January 31, 2017, to March 2, 2017.
Q&As about the Process and Extended Due Date
What about filing these statements with the IRS? Is there an extension? No. The IRS has determined that there’s no similar need for additional time for employers, insurers, and other providers of minimum essential coverage to file 2016 Forms 1094-B, 1095-B, 1094-C and 1095-C with the IRS. The deadline for filing the forms with the IRS is not being extended, and remains February 28, 2017, if not filing electronically, or March 31, 2017, if filing electronically.
However, the extension in IRS Notice 2016-70 doesn’t affect the provisions regarding automatic and additional extensions of time for filing information returns, which remain available under the normal rules by submitting Form 8809, Application for Extension of Time to File Information Returns.
Who must furnish these statements? Government agencies that administer government-sponsored health insurance programs, health insurance issuers, sponsors of self-insured health plans, and other providers of “minimum essential coverage” must generally file annual returns reporting information for each individual for whom such coverage is provided. An entity filing an information return reporting minimum essential coverage to the IRS must also furnish a written statement to each individual listed on the return that shows the information that must be reported to IRS for that individual.
The ACA also requires applicable large employers (generally, employers with at least 50 full-time employees, including full-time equivalent employees in the previous year) to provide the individuals with Form 1095-C.
Why are these statements provided to employees? This reporting allows taxpayers to establish, and for the IRS to verify, that the taxpayers were covered by minimum essential coverage and their months of enrollment during a calendar year.
Why is the deadline being extended? The IRS decided to extend the deadline following consultation with stakeholders and the Department of the Treasury, as a substantial number of employers, insurers and other providers of minimum essential coverage need additional time. The extension is automatic.
Do businesses and others need to do anything to take advantage of the extension? No. The extension is automatic, and no documentation needs to be submitted to receive the extension from the IRS.
In addition, the IRS is providing the same penalty relief that it provided with respect to 2015 returns. IRS Notice 2016-70 extends the good-faith penalty relief from penalties for failure to timely furnish and file the information returns from the 2015 tax year to the 2016 tax year. The IRS will take into account whether an employer or other coverage provider made reasonable efforts to prepare for reporting the required information to the IRS and furnishing it to employees and covered individuals, in determining good faith.
Examples of good faith include gathering and transmitting the necessary data to an agent to prepare the data for submission to the IRS, or testing the ability to transmit information to the IRS. In addition, the IRS will take into account the extent to which an employer or other coverage provider is taking steps to ensure that it will be able to comply with the reporting requirements for 2017.
For employers and other coverage providers that don’t meet the relevant due dates, the IRS is encouraging to still furnish and file. The IRS will take such furnishing and filing into consideration when determining whether to abate penalties for reasonable cause.
According to IRS Notice 2016-70, the tax agency doesn’t anticipate extending this transition relief to reporting for 2017, either with respect to the due dates or with respect to good faith penalty relief. However, as indicated in presidential election campaign promises, there could be major changes to the ACA under the Trump administration.
Contact your tax, payroll or employee benefits advisor if you have questions about your ACA responsibilities under the Affordable Care Act.