IRS Announcement: New Deadline for Reporting Employee Health Coverage

IRS Announcement: New Deadline for Reporting Employee Health Coverage

ACA Reporting Penalties

Each year at this time I like to revisit for employers the deadlines for reporting employee health coverage to the IRS. The fines for late filings are hefty so it’s important that companies ensure they’re on track early in January.

In November, 2018 the IRS issued Notice 2018-94, extending the deadline for employer and insurer reporting from January 31st, to March 4th, 2019.

The following offers employers important information about the deadlines and also answers some of the most frequently asked questions about the reporting requirements.

1. What is the difference between the 1095-B and 1095-C forms?

If the 1095 B and 1095 C forms continue to be a point of confusion for you remember it is essentially a W2 that reports on health insurance coverage for the prior year. Try this little trick for remembering which is which.

1095-B: Think of “B” as standing for “Bought health insurance”. This is the form that insurance companies send to individuals so those individuals can prove to the IRS they BOUGHT health insurance in the prior year. In many cases it will be the insurance companies furnishing the B forms to individuals and to the IRS. The only exception occurs with self-funded employers. (See the table below for explanation).

1095-C: Thing of “C” as standing for “Compliments of the employer”. The “C” forms are forms large employers use to prove to the IRS that they OFFERED health insurance to all full time employees in the prior tax year.
The chart below clarifies the various reporting required in each circumstance and the party responsible.

2. What are the deadlines for furnishing the forms?

3. What are the penalties for failing to file by the deadline?

In 2019, the fine for failing to furnish forms to employees by the deadline will increase to $270.00 per return.

Similarly, the fine for failing to file forms with the IRS by the deadline also increases to $270.00 per return.

Failure to adhere to both deadlines will cost an employer $540.00 per return, however it is capped at no more than $3,275,000 per calendar year.

Example, in the case of 100 employees, failure to file returns by the deadline will cost an employer $54,000.00.

4. What are the penalties for forms containing errors?

In Notice 2016-70 the IRS extends the good-faith relief that applied to filings in 2015 to 2016 and 2017 and now to 2018. This relief applies to missing and inaccurate taxpayer identification numbers and dates of birth, as well as other information required on the return or statement.

In other words, as long as employers make a good attempt to ensure all information is accurate, AND then file the information by the applicable deadline, it is unlikely a penalty will be assessed.

IMPORTANT: To show “good faith” efforts to qualify for this relief, filers must meet the applicable deadlines.

5. Can an employer apply for an extension on the deadlines for filing with the IRS?

Yes. Filers can still take advantage of an automatic 30-day extension of the IRS filing deadline by submitting Form 8809 before the relevant due date. Click here to download Form 8809.

6. Can I file my returns by paper, regardless of how many I am filing?

No. Employers filing 250 or more returns are required to file electronically.

7. Can employees file their tax returns without the 1095B, 1095C forms?

Yes. In view of the fact the deadline for furnishing 1095B and 1095C forms has been extended to March 4th, 2019 and the W2 deadline remains January 31st, 2019, many employees may be ready to file their tax returns prior to receiving their 1095B and 1095C forms. The IRS does not penalize individuals who file their tax returns in the absence of a 1095B or 1095C form.

For questions about the forms or employer responsibilities in general, please contact me at jmorrow@abcllc.org or 602-903-4047.

Author
Joanna Morrow

Joanna Morrow is an employer consultant and advocate who has worked in the employee benefits industry for over two decades. She works diligently to help employers overcome obstacles in their business by sharing her expertise in Human Resources, Benefits & Compensation, Process Mapping, Risk Management and ERISA/DOL/IRS compliance. She is a licensed life and health insurance professional in the State of Arizona and is an active member of the National Association of Health Underwriters (NAHU). Joanna is a senior partner at Arizona Benefit Consultants in Phoenix.

Add your Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.