Permanent Extension for Providing Forms 1095-B and 1095-C to Employees Finalized

In final regulations released on December 12, 2022, the Department of the Treasury and the Internal Revenue Service (IRS) formally adopted and permanently extended the automatic 30-day extension for employers and other reporting entities to provide Forms 1095-B and 1095-C (collectively, “the Forms”) to employees. The Forms provide individual statements on health coverage or offers of coverage. The final regulations are applicable for calendar years beginning after December 31, 2021, so are now in effect.

While the deadline to provide the Forms to employees officially remains January 31^st annually, the adoption of the built-in 30-day extension pushes this out to March 2, 2023 for the 2022 tax year, thus giving employers more time to get the Forms distributed and still be considered compliant. Going forward, this date will continue to be March 2^nd unless it is a leap year, in which case the extension will go to March 1^st instead. Also, if the date were to fall on a weekend in a particular year then the Forms would be due on the subsequent business day.

Employers and plan sponsors should be aware that the IRS has not extended  the deadlines for filing the Forms with the IRS. Those dates will remain February 28, 2023 (if filing by paper form via the mail) or March 31, 2023 (if filing electronically). Employers filing 250 or more 1095-C forms must file electronically but employers filing less than 250 can implement either methodology to fulfill the requirement.

Penalties for Non-Compliance

The penalties for not providing these Forms to employees (or for providing inaccurate information) can quickly get steep, with fines of up to $280 per form. A penalty of up to $280 per form would likewise/additionally be levied for not filing the Forms with the IRS, so penalties in total could rise to $560 for non-compliance.

Penalties may potentially be avoided if the employer or reporting entity can prove that they had reasonable cause for their failures rather than doing so out of willful neglect, but the IRS has removed the “good faith” standard that previously allowed a degree of lenience for incomplete or inaccurate reporting. 

State Laws

A handful of states (California, Massachusetts, New Jersey, Rhode Island, and Vermont, in addition to Washington, D.C.) have their own versions of the individual health coverage mandate on the books applicable to individuals who reside in these jurisdictions. The final regulations explicitly note that “the Treasury Department and the IRS have no authority over state reporting and furnishing requirements.” As such, individual states are permitted to set their own regulations as it pertains to deadlines for filing documents related to health coverage. In some instances, it may be possible that these deadlines are not quite as lenient as the final regulations allow.

Employers and other reporting entities affected by these state regulations should continue to monitor any state and local guidance for clarity on pertinent deadlines and requirements to ensure that they are providing the Forms on a timely basis.

Additional Links

• 2022 Instructions for Forms 1094-C and 1095-C
• Final Regulations
• Form 1095-C Indicator Code Crib Sheet for the 2022 Tax Year