IRS’s Final 2021 ACA Reporting Forms and Instructions Include Important Process Changes

The IRS has released final Affordable Care Act (ACA) information reporting forms and instructions for 2021. As a reminder, Forms 1094-B and 1095-B are filed by minimum essential coverage providers (insurers, government-sponsored health programs, and some self-insuring employers and others) to report coverage information in accordance with Code § 6055. Forms 1094-C and 1095-C are filed by applicable large employers (ALEs) to provide information that the IRS needs to administer employer shared responsibility penalties and eligibility for premium tax credits, as required under Code § 6056.

The 2021 final instructions generally track the draft instructions (see our Checkpoint article) with respect to completion of the forms. The Form 1095-C instructions include two “new” codes (1T and 1U) for certain ICHRA coverage offered to an employee and spouse but not dependents. (These codes were originally announced in February 2021 (see our Checkpoint article).) The instructions retain the requirements, first effective for 2020, to report the plan year’s start month and the January 1 age of any employee receiving an offer of ICHRA coverage. With respect to process, both sets of instructions differ from the draft instructions in important ways. Consistent with proposed regulations announced in November 2021 (see our Checkpoint article), the instructions describe an automatic 30-day extension—from January 31 to March 2, 2022—for furnishing Forms 1095-B and 1095-C to individuals. The Form 1095-B instructions also reflect an alternative to automatically furnishing Forms 1095-B to responsible individuals so long as a “clear and conspicuous” notice with information about requesting the form is prominently posted on the reporting entity’s website, and a form is furnished within 30 days after an individual’s request is received. (The instructions elaborate on the notice requirements.) A similar alternative is described in the Form 1095-C instructions for ALEs issuing Forms 1095-C to covered individuals in the ALE’s self-insured health plan, but the alternative is unavailable with respect to employees who were full-time for any month in 2021. Both sets of instructions remove references to penalty relief for reporting incomplete or incorrect information if the filing entity made good faith efforts to comply. Although the per-failure penalty remains at $280, the maximum annual penalties reflect indexed increases. The threshold for mandatory electronic filing with the IRS remains at 250 returns, applied separately to each type of return and to original and corrected returns.

EBIA Comment: The instructions are late this year, undoubtedly due to last-minute revisions required by the proposed regulations’ revival of relief that was expected to expire after 2020. The deadline extension is automatic, but the alternative method of furnishing forms to certain individuals requires careful consideration of the detailed requirements described in the instructions. Elimination of the good faith penalty relief for incorrect or incomplete information means filers need to really scrutinize their returns before filing. With the issuance of the final forms and instructions—and availability of updated Publications 5164, 5165, 5258, and 5308, which provide technical details related to electronic filing—filers should have all the tools they need to prepare for filing the 2021 forms. For more information, see EBIA’s Health Care Reform manual at Sections XXVIII (“Shared Responsibility for Employers (Play or Pay Penalty Tax)”), XXXVI.C (“Information Reporting of Minimum Essential Coverage (Insurers and Employers That Self-Insure)”), and XXXVI.D (“Information Reporting of Employer-Sponsored Coverage (Applicable Large Employers)”). Also, watch for updates to EBIA’s Form 1094/1095 Workbook to reflect 2021 reporting requirements.

Contributing Editors: EBIA Staff.