On December 9, 2019, the Internal Revenue Service (IRS) released the final ACA reporting forms and instructions for the 2019 ACA reporting plan year filing, this is an update from the prior bulletin, Draft Forms for 2019 ACA Reporting Released. The final documents include Forms 1094-B and C and 1095-B and C as well as the corresponding instructions on how to complete the filing.
As outlined in the prior bulletin, ACA reporting Forms 1094-B and 1095-B must be filed and provided from the insurance carrier for fully-insured medical plan offerings or non-applicable large employer (ALE) who offer self-insured medical coverage to their employees, while Forms 1094-C and 1095-C must be filed by an applicable large employer (ALE). An ALE is an employer with an average of at least 50 full-time employees and who offers self-insured medical coverage as proof that the provided coverage meets the minimum essential coverage (MEC) per ACA guidelines.
The final ACA forms and instructions are very similar to the 2018 ACA forms with a few modifications to the 2019 forms. The instructions have been updated to:
- Remove any mention of the individual mandate penalty that was removed by an executive order issued by President Trump on January 20, 2017.
- Provide additional information pertaining to the deadline for providing health plan participants with their 2019 Form 1095-B and Form 1095-C. Instructions state that the deadline has been extended by 31 days from January 31, 2020 to March 2, 2020.
- Account for the good-faith transition relief from penalties provision extension by an additional year to apply toward the PPACA 2019 filing. The transition relief provision provides reprieve from PPACA penalties for employers who report incorrect or incomplete information during the PPACA required filing process. Thus, as long as an employer shows that they made a good-faith effort to comply with the PPACA reporting requirements, both in furnishing forms to individuals and filing with the IRS, penalties will be waived. The relief does not apply to forms that were provided untimely to individuals or delayed filings with the IRS.
- Provide additional detail pertaining to the penalty relief for employers who offer fully-insured health plans and issue Form 1095-B. The IRS indicates that Form 1095-B only needs to be provided to employees upon request and does not need to be automatically issued to employees for the 2019 plan year. These forms must be provided to the individual within 30 days of the request.
- Explain that the “Plan Start Month” box on Form 1095-C will remain optional for the 2019 filing year. The “Plan Start Month” box is an unnumbered line within Form 1095-C where a two-digit number (01 through 12) is inserted and denotes the month that the plan year begins. For example, if the medical plan starts in April, you would put “04” in this field.
- Include the increased ACA penalty amounts for 2019 reporting:
- Failure to file a correct information return – $270 for each return the failure occurs, with a total maximum penalty of $3,339,000 for the year.
- Failure to provide a correct payee statement – $270 for each statement the failure occurs, with a total maximum penalty of $3,339,000 for the year.
- Special rules apply that increase the per-statement and total penalties noted above if there is intentional disregard of the requirement to file the returns and provide the required statements.
The IRS provides clarification that even though the individual mandate penalty has been removed for 2019, Section 6055 of the Internal Revenue Code still applies. This means that every ALE is required to report health coverage information by filing a return with the IRS and provide Form 1095-C to those eligible for health coverage. Additionally, the 2019 ACA filing for Sections 6055 and 6056 of the Internal Revenue Code is due to be filed to the IRS no later than February 28, 2020 if filing by paper, or March 31, 2020 if filing electronically. Although the IRS provided an extension for furnishing participants with Form 1095-C, this has no impact on the IRS filing deadline.
Contact your Cowden representative for more information on this or other compliance issues.