January 21, 2022

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Fast Facts
NAHU Submits Comments on Proposed Changes to ACA Reporting Process
Compliance Now: DOL FAQs Address Coverage for Colonoscopies and Birth Control
CMS National Training Program: Understanding Medicare Webinars
Donít Miss the Early-Bird Registration Deadline for Capitol Conference
State Spotlight: Connecticut Announces New Broker Training Program
Healthcare Happy Hour: Looking Forward to NAHUís 32nd Annual Capitol Conference
COVID-19 in 2022: What's Changing? What Will Remain the Same?
HUPAC Roundup: Save the Date for Three Exciting Events at Capitol Conference
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NAHU Submits Comments on Proposed Changes to ACA Reporting Process

On November 22, the IRS published proposed rules that would make significant changes to the ACA reporting process for both large and small employers. These changes specifically impact the Form 1095-B and Form 1095-C distribution deadline and good-faith transition relief. NAHU recently submitted comments to the IRS with some questions and concerns regarding the proposed regulations.

Section 6055 and 6056 of the ACA reporting regulations require that employers furnish Forms 1095-B and  1095-C to employees no later than January 31 of the year following the applicable calendar year. In other words, under the formal rules, forms for the 2021 calendar year need to be distributed by January 31, 2022. However, since 2015, the IRS has consistently extended this deadline, typically by 30 days. This proposed rule contends to extend the deadline permanently beginning with the 2021 calendar year, meaning that forms will still be considered punctual if employers furnish them to employees no later than 30 days after January 31. This automatic extension indicates that forms furnished after the 30-day grace period will be considered late and that employers will not be able to request additional time past the 30 days to furnish forms to employees.

In our comments, NAHU noted our appreciation for a permanent, automatic extension, as the additional 30 days added to this delivery window is essential relief for many employers. It is particularly important for those that choose to utilize the Form W-2 affordability safe harbor, since those employers cannot complete their reporting processes until they have all wage data for the prior year fully calculated, which often does not happen until the first few weeks of the new year. We also urged the IRS to finalize this rule as soon as possible, considering the positive impact this permanent extension would have on the affected parties, in addition to urging the agency to communicate the deadline change to states that have imposed their own individual health insurance coverage mandates and related reporting requirements.

Another major component of the IRS’ proposed rules is the suggested elimination of good-faith transition relief. Since the ACA’s reporting requirements first went into effect in 2015, the federal government instituted a good-faith policy, which has shielded employers from penalties for incorrect or incomplete ACA filings, provided that the employers have made a “good-faith effort” to comply with the requirements; this proposed rule seeks to put an end to this good-faith relief starting with the 2021 ACA filing. This change will make it more difficult for employers to avoid ACA penalties based on incorrect filings.

NAHU asked the IRS to reconsider this action, as this this transitional relief protects plan sponsors and issuers that accidentally include incorrect or incomplete information, including TINs or dates of birth, as part of their information returns or reporting statements. We also noted that reporting this information can be complex – particularly for large employers – and mistakes are deceivingly easy to make. NAHU provided the example of NAHU members who specialize in assisting employers with ACA reporting who note that ALEs routinely fill out Form 1094 incorrectly, indicating the client didn’t offer minimal essential coverage to the required percent of the population, even though it did offer the coverage. Many ALEs mistakenly believe that 95 percent of eligible employees need to take up the coverage rather than just receive an offer. Others just do not complete the form correctly. This does not just cause a reporting error, but it can also lead to massive penalties when someone goes to the exchange. Additionally, ALEs and even some compliance vendors still struggle with coding Form 1095-C correctly. The use of inconsistent safe harbors, blank field and incorrect code combinations are common, as are simple data errors. Overall, we made it clear to officials that a lack of good-faith compliance relief means that employers that make a mistake the first time they go to report will not receive proper protection.

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