The December Monthly Minute highlights the IRS' decision to make permanent the ACA individual-reporting extension and EBSA's restoration of $1.4B as a result of its FY22 enforcement actions.
The Best Things Come to Those Who Wait (and Wait)
On December 15, the IRS published final regulations providing an automatic extension for providers of minimum essential coverage ("MEC"), including self-insured employers, and "applicable large employers" ("ALEs," employers with 50 or more full-time employees) to furnish ACA-required Form 1095s. The automatic extension generally applies for calendar years beginning after December 31, 2021. This extended timing formalizes extensions applicable in previous years issued under prior IRS Notices and permanently extends the deadline for Forms 1095 to individuals until 30 days after January 31 (or the next business day, where applicable). Correspondingly, the 2022 Form 1095 instructions specify the deadline to furnish forms to individuals is March 2, 2023. Also included in the new rules is an alternative method for furnishing individual statements in certain situations that involves a prominent website posting and provision of forms on request, including with respect to furnishing Forms 1095-C to non-full-time employees and non-employees enrolled in an ALE's self-insured health plan. This relief does not apply to information reporting to the IRS.
KMK Comment: The IRS' permanent extension of the individual reporting requirement coupled with a streamlined alternative to individual reporting in limited circumstances may reflect IRS efforts to increase ACA reporting compliance. However, in the absence of continuing good-faith reporting relief, the permanent extension and reporting alternative provide little in the way of actual relief to reporting employers.
'Tis the Season of Giving: EBSA Restores over $1.4B to Plans, Participants and Beneficiaries
The EBSA is responsible for overseeing approximately 747,000 retirement plans (with pension plan assets estimated at $12 trillion), 2.5 million health plans, and 673,000 other welfare benefit plans, covering over 152 million individuals. In FY22, the EBSA restored over $1.4 billion to plans, participants, and beneficiaries. The $1.4 billion in recoveries resulted from various different enforcement mechanisms. For example, $931 million resulted from civil enforcement actions (66% of EBSA's enforcement actions resulted in monetary penalties or other corrective actions). And, $422.1 million was restored to individuals through EBSA's information compliant resolution program which generally begins with an individual directly contacting EBSA for assistance with plan complaints. Also concerning is the fact that EBSA investigations in FY22 led to the indictment of 103 individuals – including plan officials, corporate officers, and service providers – for employee benefit plan-related offenses.
KMK Comment: The magnitude of EBSA corrections and penalties is a stark reminder to plan fiduciaries to work with service providers and counsel to monitor compliance, treat participant complaints with care, and utilize available correction programs to avoid costly enforcement actions by EBSA.
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