By Christy Abend
The end of the year is reporting season for the Affordable Care Act (ACA) and it’s well-known for being a busy time. But with a new year also comes the increased risk of penalties if deadlines are missed. This year, however, human resources and benefits professionals can take advantage of two ACA regulatory updates designed to help ease the deadline pressure.
The deadline to furnish Forms 1095-B and C to individuals has been permanently extended from January 31 to March 2, as described in final regulations from the U.S. Department of Treasury and the Internal Revenue Service (IRS). This applies for companies with calendar years beginning after December 31, 2021.
Applicable Large Employers (ALEs) now have a permanent, automatic 30-day extension to furnish Form 1095-B to individuals. The deadline is now March 2. Previously, the deadline to furnish this form had been January 31.
Alternate method to furnish Form 1095-B
As long as the reporting entity posts a “clear and conspicuous notice” in a reasonably accessible location on its website stating individuals can receive a copy of Form 1095-B upon request, ALEs are no longer required to print and deliver Form 1095-B directly to the primary insured or employee (also known as the “responsible individual”).
Any notice posted on a website must include a physical address and an email address where an individual can send their request as well as a phone number individuals can call with questions. This notice must be posted no later than March 2 and kept at the same location on the website through October 15 of the relevant calendar year.
Reporting entities must provide the requested Form 1095-B within 30 days upon receiving the request.
The deadline to furnish Form 1095-C to individuals has also been permanently and automatically extended to March 2. Previously, this deadline had been January 31.
These extensions do not impact state form furnishment dates. This creates additional complexities for employers with employees in California. The deadline to distribute forms to employees in CA continues to be January 31 each year, and while CA has not indicated a monetary penalty for late delivery to employees, there is no guarantee this won’t change at some point in the future.
ALEs have enjoyed several years of leniency against IRS penalties if employers reported incorrect or incomplete information, as long as the employer could prove it made a “good faith effort” to comply. That policy officially ended beginning in plan year 2021 when the IRS announced the end of “good faith relief.” Despite feedback from employers, the IRS has not reconsidered this, and good faith relief is not in place for the 2022 reporting year. ALEs must now renew their focus on avoiding inaccurate or late reporting – or risk potentially steep penalties.
If an ALE files incomplete or incorrect forms or misses the deadline for filing, it is liable for penalties under IRC 6721. For the 2022 reporting year, penalties can be up to $580 for each incorrect or late filing. When an employer fails to provide Forms 1095-C to employees by the deadline, it can face penalties under IRC 6722 – up to $580 for every infraction. Even greater penalties apply for not offering affordable coverage to 95 percent of full-time employees. Read our blog on how to avoid costly 2022 ACA penalties for more detail.
A service such as ACA Management from Equifax Workforce Solutions can help you ensure every organization has real-time employee eligibility information and actionable data to better understand and work to eliminate ACA penalty risk.
Equifax ACA Management solutions support complex scenarios such as multiple ALEs and mergers and acquisitions and are specifically built to assist with IRS audits and responses. Discover flexible solutions to help you meet your specific ACA needs.
Don’t forget to download our ebook, 5 Greatest ACA Challenges for Complex Employers and How to Solve Them. Companies across myriad industries around the country struggle to maintain their ACA process for several reasons that go above and beyond normal expectations. We call them complex employers. If you are one of them, the fines associated with failure to maintain your part of the Employer Shared Responsibility Provisions (ESRP) don’t have to be a cost of doing business. You can work within ACA regulations, and this ebook will help show you how.