IRS Extends Delivery Date Deadline for Forms 1095 B and C And Announces Good Faith Compliance Relief

IRS Extends Delivery Date Deadline for Forms 1095 B and C And Announces Good Faith Compliance Relief

On November 29, 2018, the Internal Revenue Service (IRS) extended the deadline for applicable large employers (ALEs) and health insurance issuers (including small business self-funded-health plans; e.g. Level-Funded Plans) to furnish Forms 1095 B and/or C to employees and covered individuals.  The new deadline is March 4, 2019, instead of January 31, 2019, so affected companies should let employees know that they do not need to wait to receive Forms 1095-B and 1095-C before filing their individual income tax returns. Notice 2018-94 also extends good-faith compliance transition relief to entities subject to the Affordable Care Act’s information reporting requirements for the 2018 tax year.

The deadline extension should be welcome news for many employers and small business self-funded health plans since it provides an extra month to make sure that all Forms 1095-C and/or B are sent out to applicable employees and covered individuals.  However, employers and self-funded plans need to know that the IRS did not extend the due date for employers and health insurance issuers to submit coverage documentation to the federal government.  Paper copies of Forms 1094 and 1095 B&C are due to the IRS by February 28, 2019, and electronic submissions must be completed by April 1, 2019.  All sized companies may submit their forms to the IRS electronically, but companies that issue 250 or more Forms 1095 B and/or C must use the electronic submission process.

Furthermore, since Notice 2018-94 gives employers and issuers more than 30 days of extra time to issue statements to people, the IRS will not grant or respond to requests for additional 30-day extensions for entities for statement delivery in 2019. However, employers and issuers that need an extra 30 days to file their Form 1094 and 1095 information with the IRS may request an automatic extension via IRS Form 8809 for that purpose.

As for the good faith compliance relief, it’s important to understand that Notice 2018-94 only shields entities from penalties for honest information reporting errors.  There is no penalty protection for employers and health insurance issuers that knowingly file incorrect or incomplete statements or returns using Forms 1094 and 1095 B and C.   Entities that ignore the health information reporting requirements or issue and/or file late statements and returns could face penalties too.  Finally, good faith compliance relief in no way shields ALEs that fail to offer coverage appropriately from potential employer-shared responsibility penalties issued under IRC §4908H (“Pay-or-Play” or “Employer Mandate”).  However, employers and other coverage providers that do not meet the relevant due dates should still furnish statements and file returns with the IRS as soon as possible, since the IRS will consider that when determining whether to abate penalties for reasonable cause.

If your organization has questions regarding its potential reporting obligations, please contact your Kistler Tiffany Benefits’ Employee Benefits Consultant.