On Nov. 18, the Internal Revenue Service extended the deadline for distribution of form 1095 from Jan. 31 to March 2. According to the IRS, after meeting with the U.S. Treasury Department, the Service determined that many employers and insurers were in need of extra time to prepare and distribute forms 1095-B and 1095-C. In the statement, the IRS also made it clear that it would not formally reply to requests for further deadline extensions. While this delay probably comes as a pleasant surprise to many employers, it's no excuse to rest.
What is form 1095?
Issuers of health insurance, self-insuring employers, government agencies, applicable large employers and other providers of minimal essential coverage are required to file forms which provide information to the IRS regarding provided coverage. Here's some information about each of these forms:
- Form 1095-B: According to the IRS, this form provides employees important information about coverage for them, their spouses and their dependents. Employees who received coverage from more than one provider this year can expect to receive more than one form. Those who had coverage for only part of the year can use this form to determine if they qualify for an exemption from coverage requirements.
- Form 1095-C: This form is for full-time employees who worked for an applicable large employer this year. Likewise, those who received self-insured coverage through an employer will also receive this form. Those who enrolled in coverage through the marketplace may use the information in this form to determine if they qualify for a premium tax credit. Penalty exemptions can also be determined using the information found in this form.
Employees should note that these are just two of many ACA forms that they may receive this year. Form 1095 is the only one to receive an extension. All other deadlines remain unchanged.
Companies have an extended window to file and distribute form 1095.ACA penalties could be significant
In light of the recent presidential election, the future of the ACA is unclear. However, employers must continue to push forward with reporting as before. ACA Times noted that, should changes to the legislation come, they likely won't be enforceable until 2019. It should be noted that, though the act was signed in 2010, the employer mandate wasn't enforced until five years later, with provisions for small employers arriving a year later.
It's vital that employers report their numbers accurately and comply with the law in full. Failure to do so could lead to an audit and major fines. Depending on the type of violation, fines could be as high as $3,000 per employee. Although the IRS offers "good faith relief" for errors in reporting during these transition years, it's better to get it right the first time.
PEOs help companies avoid fines
One of the best ways for companies to avoid fines and easily navigate the tricky waters of ACA compliance is to work with a Professional Employer Organization. Rather than leaving these complicated matters to a small, overworked HR department, outsourcing these tasks can ensure that companies see no compliance issues down the line. This gives managers the time to focus on the aspects of running the business they know best.
ACA compliance has many pitfalls that can be avoided by turning to experienced professionals. Check out AlphaStaff's FREE ebook regarding the five biggest challenges to small business ACA compliance for more information. The deadlines for compliance may have been extended by 30 days, but that's no excuse to slack. Beat the deadline and get back to focusing on growing your business.