Something to Be Thankful For - IRS Extends Deadline for Distributing ACA Reports

Ballard Spahr LLP

Ballard Spahr LLP

Each year since employers have been required to prepare reports under the employer and individual mandates of the Affordable Care Act, the IRS has extended the deadline for distributing the forms to employees. It appeared as if that extension was coming to an end. But the IRS has now issued proposed regulations that not only extend the deadline for distributing the 2021 reports, but would make the extension permanent.

Under the proposed rule, employers will be granted an automatic 30-day extension to distribute the reports to employees. No application for the extension is required. If the new deadline falls on a weekend or legal holiday, the deadline will be extended to the next business day. The rules provide that employers may rely on the proposed rules until they are finalized. As a result, the deadline for furnishing the 2021 reports to employees will be March 2, 2022. 

The proposed rule also relieves insurers of the responsibility for furnishing Form 1095-B that shows whether an individual has actually obtained minimum essential coverage. This information lost its relevance when the penalty for failing to obtain that coverage was reduced to zero dollars. The relief will remain in effect as long as the penalty remains zero dollars. Self-funded employers may take advantage of this relief, but only with regard to part-time employees who are covered under their health plans (not full-time employees for whom they report information on Part III of Form 1095-C). Those taking advantage of this relief must post a clear and conspicuous notice on the applicable website informing individuals of how they may obtain a copy of the report on request.

The guidance does not extend the deadline for submitting the reports to the IRS, which remains February 28 when filing paper and March 31 when filing electronically, and, very significantly, does not extend the good faith compliance standard that thus far has allowed employers to correct errors and omissions even after they have been discovered by the IRS. Employers should make particular efforts this year and in the future to confirm that information in the reports is complete and accurate.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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