Author: Shelly Hodges-Konys, Director of Compliance
If you are an applicable large employer and required to report offers of coverage on Form 1095-C and haven’t distributed or filed them yet, you may want to give them one last look. The reasons are two-fold. The final forms and instructions released by the IRS in December:
- Provide an automatic extension of time to distribute Forms 1095-C to employees; and
- Confirm that good faith transition relief will no longer apply for years 2021 and beyond.
This means that accurate reporting is especially important and there is still time.
Extension of Time to Furnish Statements
Employers now have until March 2nd to provide Form 1095-C to employees and participants. Consistent with previously issued proposed rules, the instructions confirm that Forms 1095-C will be considered timely furnished if provided to individuals no later than 30 days after January 31st of the year following the calendar year to which the statement relates. This extension is automatic. Employers do not need to formally request an extension from the IRS.
However, the actual due dates for filing Form 1094 and Form 1095 returns with the IRS have not changed. The deadline to file 2021 Forms 1094 and Form 1095s is February 28, 2022, for paper filers, and March 31, 2022, for those who file electronically.
End of Good Faith Transition Relief
Since the first Forms 1094 and 1095 were due in 2015, the IRS has provided some relief from reporting penalties for incorrect or incomplete information. Relief was available as long as an employer filed timely and could demonstrate that it made a good faith attempt to comply with the reporting requirements. This relief is no longer available for reporting years moving forward beginning with the 2021 filing. The IRS can currently impose penalties of up to $280 per return for reporting errors and the penalty is often double if the error is on both the furnished statement and the filed statement, making accuracy even more important.
Other Changes to Note
In addition to the changes noted above, new codes were added for employers whose offer of coverage to the employee or the employee and spouse is an Individual Coverage Health Reimbursement Arrangement (ICHRA). Additionally, the 2021 1095-C instructions allow applicable large employers with self-insured health plans to use an alternate method to furnish statements to individuals who were not full-time employees, but otherwise covered under the health plan for the entire year (if certain conditions are met). You can view the full instructions here for more information.
Employer Action Items
All of this means that accurate reporting is more important than ever. If employers have not already done so, they should consider giving their 2021 Forms 1094 and 1095 one last review before distribution or filing to make sure they are accurate and complete. Prudent employers should also review the reporting parameters in any automated systems to ensure that they start 2022 on the right foot.
Please reach out to your HORAN representative with additional questions at 800.544.8306.
The information contained in this document is informational only and is not intended as, nor should it be construed as, legal or accounting advice. Neither HORAN nor its consultants provide legal, tax nor accounting advice of any kind. We make no legal representation, nor do we take legal responsibility of any kind regarding regulatory compliance. Please consult your counsel for a definitive interpretation of current statute and regulation and their impact on you and your organization.