The IRS has extended the deadline to provide statements to individuals regarding their health care coverage and the employer’s offer of minimum essential coverage from January 31st to March 2nd. Sound familiar? It seems like every year, shortly before the January 31st deadline, the IRS issues an extension. What is different this time is that the extension is now permanent under new proposed regulations. No more waiting, wondering, and hoping.
If you don’t live and breathe these types of developments, here is a little background for context: the Affordable Care Act (ACA) requires applicable large employers and insurers to provide individuals with annual statements of health coverage and offers of health coverage. The purpose of furnishing these statements to individuals was mainly for the individuals to file the statement with their income taxes in order to demonstrate that they had the minimum essential coverage required under the ACA individual mandate. However, the penalty for a failure of an individual to obtain health coverage was later reduced to $0, and the need for these individual statements has been greatly reduced.
Making this extension permanent gives insurers and employers some consistency for administering these reporting requirements, instead of having to wait for last-minute extension announcements each year. The additional time is welcome as it gives employers and insurers more time after the end of the year to prepare the complicated reports and arrange distribution to the individual employees.
Some things to know about this extension:
- Even though the extension is proposed, and once final will be effective for the 2022 reporting year, employers and insurers may rely on the extended deadline for statements due in 2022 for the 2021 reporting year. This means that the 2021 statements must be furnished to individuals no later than March 2, 2022.
- If March 2nd falls on a weekend or holiday, the deadline will be the next business day
- This extension is automatic and a request for extension does not need to be filed. Additional extensions are not available
- The deadline for filing these reports with the IRS has not been extended and remains February 28th for paper filings and March 31st for electronic filings. These reports to the IRS are for purposes of monitoring compliance with the employer mandate (requiring offers of minimum essential coverage to employees and dependents that are affordable and provide minimum value). Those penalties have not been reduced to $0!
- Some states have individual health coverage mandates that require comparable individual statements from insurers and employers. You should verify whether your state has adopted a similar extension of the state deadline or not. If not, the earlier state deadline will need to be met.
Something else to be aware of is that the IRS used to provide transitional penalty relief for filings that had incomplete or inaccurate information but were filed “in good faith.” This is no longer in effect and the proposed regulations did not extend this relief. This just makes it that much more important that reporting is complete and correct, and good intentions are not enough. While this may seem harsh, penalty relief is still available for failures that meet the reasonable cause standards under Code Section 6724.
If you have any questions about this extension, ACA filing requirements, or the employer mandate, please contact our attorneys for assistance.