IRS extends 1095-C production and filing deadlines

IRS extends 1095-C production and filing deadlines

By Helen Karakoudas | ACA Education Director, Integrity Data
December 28, 2015

U.S. business owners have some – not much, but some – extra time to get ready for the first production and filing season of Affordable Care Act returns.

This help that extends 1095-C deadlines for IRS compliance with the new health law came this afternoon from the Treasury Department and the IRS in Notice 2016-4. According to the notice, the February 1, 2016 deadline for delivering 1095-C forms to employees was extended by 60 days and the deadlines for filing copies of these forms with the IRS were extended by 90 days.

Given these extensions, the new ACA reporting deadlines are:

  • March 31, 2016 – date by which employees required to receive these forms must have them
  • May 31, 2016 – date by which paper copies of 1095-C statements must be mailed to the IRS
  • June 30, 2016 – date by which electronic submissions of copies of 1095-C forms must be transmitted to the new ACA-specific filing system

Extended 1095C deadlines_Integrity DataBecause the new 1095-C form – the health-insurance supplement to a W-2 form – is a year’s worth of monthly breakdowns of payroll and benefits data, it represents the most detailed workforce reporting ever required of U.S. businesses.  

“The IRS recognizes that with this type of reporting, some companies are going to go through a steep learning curve – and that many employers were overwhelmed with the detail of reporting they need to provide,” says Helen Karakoudas, ACA Education Director for Integrity Data, who has followed IRS group calls on ACA reporting for more than a year.

“Through their monitoring of their ACA help desk activities, the IRS came to recognize that the questions being asked at such a late date were not from those who were zeroing in on the finer points of the reporting, but from those just starting their discovery of what needed to be done,” Karakoudas says.

“Rather than force companies to throw anything together in order to meet the submission deadlines, they chose to smooth out the learning curve so that companies could begin to effectively incorporate this new reporting into their annual employee submissions.”

Purpose of IRS Form 1095-C

A 1095-C form documents for employees and the IRS:

  • the availability of health insurance at a place of employment
  • the quality of that coverage, if any health plan was offered

At fully insured companies, a 1095-C form must go to every employee who meets the ACA definition of full-time, which, according to the law, makes an employee eligible for an offer of health insurance. At companies that are self-insured, this form needs to go to every covered employee.

Businesses that must produce 1095-C forms are those that have 50 full-time employees, including equivalents, and those that are self-insured. These forms, which account for offers of health insurance, are required even from:

  • Employers that all along have provided health coverage to all their employees
  • Employers opting not to abide by the coverage mandate of the Affordable Care Act and accepting the penalties for not offering coverage

Perspective on this ACA extension for employers

Though this delay is the third overall for businesses that must produce these forms, it is the first delay relating to the forms themselves. Two previous delays – one in July 2013 and another in February 2014 – pushed back the beginning of the penalty-assessment periods for employers not compliant with the coverage mandate.

With this delay, the penalty-assessment periods are unchanged:

  • January 1, 2015 still is the beginning of the period that penalties can be assessed to businesses with 100 or more full-time employees, including equivalents, that do not offer coverage (or which offer non-compliant coverage) to eligible employees
  • January 1, 2016 still is the beginning of the period that penalties can be assessed to businesses with 50 or more full-time employees, including equivalents, that do not offer coverage (or which offer non-compliant coverage) to eligible employees

“This extension differs from the prior ones in that, with the prior extensions, employers had significant time to prepare and perhaps change course to a compliant solution,” said Stacy H. Barrow, an employee benefits attorney with Marathas Barrow & Weatherhead LLP in Boston. “Now, we just have a brief window for employers to be sure they’re in good-faith compliance with the reporting requirements for 2015.”  

 

Related post: What does a 1095-C delay mean for 1040 filings?

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