United States: IRS Announces Affordable Care Act Reporting Extensions

McGuireWoods Healthcare Reform Guide: Installment No. 55
Last Updated: January 5 2016
Article by Sally Doubet-King

This is the 55th in a series of WorkCite articles concerning the Patient Protection and Affordable Care Act and its companion statute, the Health Care and Education Reconciliation Act of 2010 (referred to collectively as the ACA). This article discusses Notice 2016-4 (the Notice), which the Internal Revenue Service (the IRS) issued earlier this week to extend the due dates for the 2015 information reporting requirements under Sections 6055 and 6056 of the Internal Revenue Code (the Code).

Background

Sections 6055 and 6056, added to the Code by the ACA, specify the rules on ACA information reporting requirements for insurers and most self-insured larger employers. Gearing up for the new ACA reporting requirements has been a long and complicated process overlaying, for most employers, the still-evolving systems for tracking employee coverage records.

Although in some ways the ACA reporting requirements seem to follow the Form W-2 reporting rules for wages, the forms − and more importantly, the information that must be collected and reported − are distinctly different. In other words, payroll departments or vendors could not "flip a switch" and add ACA reporting as W-2s were being prepared. Employers have found that they require separate agreements with existing or new service providers for ACA reporting. Also, in most cases, arrangements must be made to transfer data from the group health plan to complete the process. It is not surprising, then, that employers, insurers and trade groups had been urging a delay of the reporting deadlines.

Under Section 6055, persons (health insurers and employers providing self-insured health benefits) that provide "minimum essential coverage" (MEC) under the ACA during a calendar year must report this to the IRS and also to the individuals receiving such coverage. Under Section 6056, an "applicable large employer" must also report to the IRS, and to its employees, detailed information as to whether it has offered, or failed to offer, group health insurance. An individual who does not maintain MEC for all of a calendar year is liable for penalties under the ACA.

Summary of Reporting Extensions

The reporting forms to individuals were originally required to be provided by Feb. 1, 2016; the extended date is March 31, 2016. Forms that were originally due to be filed with the IRS by Feb. 29, 2016, may now be filed by May 31, 2016. The following chart summarizes the extensions:

Form/Purpose Original Reporting/Filing Date Extended Reporting/Filing Date
Form 1095-B Health Coverage (from coverage providers) Feb. 1, 2016

(to the covered individual)

March 31, 2016
Form 1095-C Employer-Provided Health Insurance Offer and Coverage (from the employer) Feb. 1, 2016

(to the employee)

March 31, 2016
Form 1094-B Transmittal of Health Coverage Information Returns (from coverage providers) Feb. 29, 2016

(to the IRS)

May 31, 2016
(paper forms)
or
June 30, 2016
(electronic filing)
Form 1094-C Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns (from the employer) Feb. 29, 2016

(to the IRS)

May 31, 2016
(paper forms)
or
June 30, 2016
(electronic filing)

The extended due dates granted by the Notice apply to all filers and supersede any extensions previously requested by or on behalf of employers or insurers. The extensions in the Notice apply only to reporting obligations under Sections 6055 and 6056 for 2015.

The IRS also indicated in the Notice that "employers and other coverage providers are encouraged to furnish statements and file information returns as soon as they are ready." Timely reporting and filing, though on an extended timeline, is still the primary focus of these information returns.

Effect of Extensions on Individuals

The IRS indicated in the Notice that some employees who obtained coverage on an ACA health insurance exchange may be relying on receipt of the Form 1095-C before they file their individual income tax returns to confirm their eligibility for the ACA's premium tax credit. Also, some individuals will need the information return (either Form 1095-B or 1095-C) to confirm the period(s) that they had MEC for the year and therefore do not owe a penalty for such period(s).

As a result of the extension granted by the Notice, to the extent that these individuals do not receive their ACA information returns prior to the time they file their 2015 tax returns, they may rely upon other information received from their employer or insurers when completing their tax returns. This applies only for the 2015 tax year. When the employees and other individuals receive the 2015 ACA information returns, they will not be required to file amended returns, but the information returns should be retained with their tax records.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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