IRS Releases Final 2020 Employer Reporting Forms and Instructions

IRS Releases Final 2020 Employer Reporting Forms and Instructions

The Internal Revenue Service (IRS) released final versions of Forms 1094-B, 1094-C, 1095-B and 1095-C, and the instructions for the B Series Forms and the C Series Forms.  These are the forms that health insurance carriers, self-funded group health plans, and applicable large employers (ALEs) will use next winter to report 2020 health coverage information to employees and the IRS.

Health insurance issuers, including smaller self-funded plans will need to send Form 1095-B statements to covered individuals by March 2, 2021, and send Form 1094-B to the IRS either by February 28, 2021 (paper filing) or March 31, 2021 (electronic filing). All ALEs, including those that offer fully-insured coverage, self-funded coverage, and those that do not offer coverage, also need to send Form 1095-C statements to eligible employees by March 2, 2021.  These entities must send Form 1094-C to the IRS by February 28, 2021 (paper filing), or March 31, 2021 (electronic filing).  ALEs and health insurance issuers that do not meet these deadlines or fail to file can be subject to non-compliance penalties of up to $280 per return, with a calendar-year maximum penalty of $3,392,000.

In some ways, the 2020 1094/1095 forms series is not too different from years past.  All of the changes to the forms and related codes involve reporting for those who have or were offered coverage through an individual coverage health coverage reimbursement arrangement (ICHRAs).  The IRS added eight new code options for 1095-C Line 14 (1L-1S), and a line 17 (zip code) solely related to the existence of ICHRAs. The C-series instructions also contain a great deal of new information about calculating health coverage affordability information for 1095-C Line 15 when offering ICHRAs.  These changes are only relevant for ALEs sponsoring ICHRAs.

In other ways, there are some very notable things about the 2020 1094/1095 forms and their instructions.  The Form 1095-C statement now prints on two pages rather than one.  ICHRAs are the sole reason for the extra piece of paper, but the impact of additional printing and postage costs will be universal.  If employer clients see cost increases from their reporting vendors in the year ahead, that extra piece of paper is probably at least partially to blame.

Another significant issue with the new forms and their instructions is that they contain no new codes or guidance associated with the multitude of employee coverage status changes over the past year due to COVID-19 business shut-downs and related economic upheaval.  Many employers may have questions in the coming months about how to code employees that remained on benefit plans even though they were furloughed or worked far less than full-time schedules.  Employee salary changes and benefits cost adjustments could also impact coverage affordability calculations. Kistler Tiffany Benefits/OneDigital will be watching the IRS closely to see if they will offer additional reporting guidance.  If additional information materializes to help health plans and employers address COVID-19 specific health coverage status changes, we will let our clients know right away!