The Internal Revenue Service (“IRS”) has extended the deadline for 2017 Information Reporting by employers (and other entities) to individuals under Internal Revenue Code sections 6055 and 6056 by 30 days. However, the deadline for these entities to file with the Internal Revenue Service (IRS) remains the same.
IRS Notice 2018-06 extends the due dates for the following 2017 information reporting Forms from January 31, 2018 to March 2, 2018:
- 2017 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage
- 2017 Form 1095-B, Health Coverage
Please note that no further extension beyond the March 2, 2017 deadline is allowed. Therefore, this deadline for furnishing the Forms to individuals must be met.
However, the due dates for filing these Forms and their Transmittals with the IRS remains unchanged. Specifically, the due date for filing the following documents with the IRS is February 28, 2018 for paper filings; however, if filing electronically, the due date is April 2, 2018 (employers who are required to file 250 or more Forms must file electronically):
- 2017 Form 1094-B, Transmittal of Health Coverage Information Returns, and the 2017 Form 1095-B, Health Coverage
- 2017 Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and the 2017 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage
However, additional extensions may still be available for filing these Forms with the IRS.
As a result of these extensions, individuals might not receive a Form 1095-B or Form 1095-C by the time they file their 2017 tax returns. In such case, IRS Notice 2018-06 explains that individual taxpayers may instead rely on other information received from their employers or other coverage providers for purposes of filing their tax returns and do not need to wait to receive Forms 1095-B and 1095-C before filing. Once they do receive their forms, the individuals should keep it with their tax records. You can find the full Notice here: https://www.irs.gov/pub/irs-drop/n-18-06.pdf.
IRS Notice 2018-06 also extends the good-faith transition relief from Code section 6721 and 6722 (which are the Code sections imposing penalties for failing to timely file an information return, filing incorrect or incomplete information, failing to timely furnish an information return, or furnishing an incorrect or incomplete information statement). Specifically, entities showing that they have made good faith efforts to comply may avoid penalties for incorrect or incomplete information reporting. However, relief is not available to entities who fail to file returns or furnish the statements, miss a deadline, or otherwise had not made good faith efforts to comply. The Notice encourages those who do not meet the deadlines to still furnish and file as soon as possible. The IRS will take this into consideration when determining whether to abate penalties for reasonable cause.
Last, the Notice indicates that this relief will not be applied in the future: “Treasury and the Service do not anticipate extending this transition relief – either with respect to the due dates or with respect to good faith relief from section 6721 and 6722 penalties – to reporting for 2018.”
As provided in previous Client Alerts, information reporting requirements are applicable under two Internal Revenue Code (“Code”) sections as follows:
- Section 6055 for insurers, self-insuring employers, and certain other providers of minimum essential coverage; and
- Section 6056 for applicable large employers.
By way of background, the IRS requires applicable large employers and sponsors of self-insured health plans to report on the health coverage offered and/or provided to individuals beginning calendar year 2015. Although the reporting requirements extend to other entities that provide “minimum essential coverage” (such as health insurance issuers), this Client Alert focuses on the requirements imposed on employers.
Employers who are deemed applicable large employers, as well as employers of any size who offer self-funded health coverage, must carefully review and study these instructions, which set forth numerous details, definitions and indicator codes which must be used to complete the requisite forms. The instructions address the “when, where and how” to file, extensions and waivers that may be available, how to file corrected returns, and potential relief from penalties imposed for incorrect or incomplete filing.
The IRS utilizes information from these returns to determine which individuals were offered minimum essential coverage, whether individuals were eligible for premium tax credits in the Marketplace, as well as to determine penalties to be imposed on employers under Pay or Play (Code section 4890H; Shared Responsibility for Employers Regarding Health Coverage, 26 CFR Parts 1, 54, and 301, 79 Fed. Reg. 8543 (Feb. 12, 2014)). Due to the impact of proper reporting, a clear understanding of these forms and instructions is essential.
Code section 6056 applies to applicable large employers (generally employers with at least 50 full-time employees, including full-time equivalent employees). Information with respect to each full-time employee (whether or not offered coverage) must be reported on Form 1095-C. Transmittal Form 1094-C must accompany the Forms 1095-C; all the Forms 1095-C together with the Transmittal Form 1094-C constitute the Code section 6056 information return that is required to be filed with the IRS. For applicable large employers who self-insure, there is a separate box to complete which incorporates the information required under Code section 6055.
Code section 6055 applies to employers of any size who self-insure. Non-applicable large employers with self-funded plans must report their information on Form 1095-B, as well as on transmittal Form 1094-B. All of the Forms 1095-B together with the Transmittal Form 1094-B constitute the Code section 6055 information return that is required to be filed with the IRS. Again, if the employer who self-insures is also an applicable large employer, the employer will instead use Forms 1095-C and 1094-C, which include a section for self-insured plans.
Employers subject to these requirements must report in early 2018 for the entire 2017 calendar year.
Additionally, employers must provide informational statements to the individuals for whom they are reporting. Form 1095-C or Form 1095-B (as applicable) may be used as this informational statement.
The links to the Final Forms and Instructions are below:
2017 Forms for Applicable Large Employers (Code Section 6056)
2017 Instructions for Forms 1094-C and 1095-C: https://www.irs.gov/pub/irs-pdf/i109495c.pdf
Form 1095-C, Employer Provided Health Insurance Offer and Coverage: https://www.irs.gov/pub/irs-pdf/f1095c.pdf
Form 1094-C, Transmittal of Employer Provided Health Insurance Offer and Coverage Information Returns: https://www.irs.gov/pub/irs-pdf/f1094c.pdf
Additionally, the IRS has posted numerous Questions and Answers regarding Code section 6056 on: https://www.irs.gov/affordable-care-act/employers/questions-and-answers-on-reporting-of-offers-of-health-insurance-coverage-by-employers-section-6056
2017 Forms for Employers who Self-Fund (Code Section 6055)
2017 Instructions for Forms 1094-B and 1095-B: https://www.irs.gov/pub/irs-pdf/i109495b.pdf
Form 1095-B, Health Coverage: https://www.irs.gov/pub/irs-pdf/f1095b.pdf
Form 1094-B, Transmittal of Health Coverage Information Returns: https://www.irs.gov/pub/irs-pdf/f1094b.pdf
The IRS’ Questions and Answers regarding Code section 6055 can be found here: https://www.irs.gov/affordable-care-act/questions-and-answers-on-information-reporting-by-health-coverage-providers-section-6055
Change in Forms for 2017
The changes to the 2017 forms are reflected in the above Instructions but are relatively minor in scope. The most noteworthy changes are to Form 1094-C, due to no section 4980H transition relief being available for 2017, with the designation of “Reserved” on both: (1) Line 22, box C; and (2) Part III, column (e).
Both sets of Instructions (for Forms 1094/1095-B and Forms 1094/1095-C) set forth the following penalty information for failure to comply with the information reporting requirements for 2017:
The penalty for failure to file a correct information return is $260 for each return for which the failure occurs, with the total penalty for a calendar year not to exceed $3,218,500.
The penalty for failure to provide a correct payee statement is $260 for each statement for which the failure occurs, with the total penalty for a calendar year not to exceed $3,218,500.
Special rules apply that increase the per-return and per-statement and total penalties with no maximum limitations if there is intentional disregard of the requirement to file the returns and furnish the required statements.
[However, as described above, the IRS has continued the good faith transition relief from penalties for 2017.]
Thus, it is imperative to timely distribute and file the forms; otherwise penalties may ensue.
This blog serves solely as a general summary of the Medicare Part D disclosure requirements, and does not constitute legal advice. If you have questions regarding the application of this fee to your plans, contact an attorney at Fraser Trebilcock.
Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2018 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or firstname.lastname@example.org.