When are the Deadlines for ACA Reporting in 2021?
The start of the year means more dates for HR teams and employers to remember, including ACA filing deadlines. From fielding questions from employees about form 1095-C to knowing how to file, there’s a lot to keep track of in order to stay compliant. Read on for when ACA reporting documents need to be distributed to employees and filed with the IRS.
Refresher: Forms 1094-C, 1095-B, and 1095-C
Affordable Care Act (ACA) reporting refers to filing the required forms with the IRS and furnishing the forms—providing copies of the forms—to employees.
The Affordable Care Act (ACA) requires employers with 50 or more full-time equivalent employees to offer healthcare coverage to full-time employees or potentially face a fine. The 1095-C form is the government’s way of tracking this, while Form 1094-C acts as a cover sheet for an organization’s collective 1095-Cs. Essentially, the 1095-C’s function is to communicate health insurance information to the IRS. Only applicable large employers (ALEs) are required to file these forms.
While the W-2’s main purpose is to communicate pay information to the IRS, the 1095-C’s function is to communicate health insurance information. Similar to the W-2, employees will also need the 1095-C to file personal taxes.
Meanwhile, 1095-Bs are distributed to people who received insurance through small self-funded groups, employers who use the Small Business Health Options Program, or fully-insured employer sponsored plans.
When are the ACA Reporting Deadlines?
This year, the IRS extended the deadline to provide employees with forms 1095-C or 1095-B to March 2, 2021. Before the announcement, Forms 1095-B and 1095-C were required to be furnished to employees—in other words, provided to employees—by January 31, 2021. The typical 30-day extension to furnish information statements will not be granted in addition to the new deadline.
Also, the filing deadlines were not extended for 2020 Forms 1094-B, 1095-B, 1094-C, or 1095-C with the IRS, all of which must be filed by Feb. 28, 2021, or e-filed by March 31, 2021. The term “filing” means submitting the forms to the IRS, either electronically or through mail.
What Happens if Deadlines are Not Met?
An ALE that fails to comply with the information reporting requirements may be subject to the general reporting penalty provisions under section 6721 (failure to file correct information returns) and section 6722 (failure to furnish correct payee statement), according to the IRS.
The penalty for failing to file a correct information return is $280 for each incorrect return, with the total penalty for a calendar year not to exceed $3,392,000. The penalty for failing to provide a correct payee statement is $280 for each statement for which the failure occurs, with the total penalty for a calendar year not to exceed $3,392,000.
If you make a good faith effort to comply with the information reporting requirements, the IRS stated that it will not impose a penalty for reporting incorrect or incomplete information on the Forms 1095-C.
What Else Should Employers Know?
With the COVID-19 pandemic still forcing businesses to work from home, it's important to consider your distribution plan for 2021. Acceptable ways to distribute 1095-C forms to your employees include mail, hand delivery (if you're not operating remotely), or email (if prior consent is given).
Once your employees start to receive tax forms, review these questions that they may have regarding Form 1095-C and what to do with it. Additionally, stay on top of important dates and filing requirements using BerniePortal’s comprehensive HR calendar, which is updated regularly as extensions are granted and new deadlines are added.
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