In the months following publication of the Employer Shared Responsibility rule, we spent a great deal of time studying the rule, learning new defined terms, and trying to imagine how it might be implemented. We knew the IRS was working on reporting forms. Ideally the forms would pull it all together, like a satisfying sequel to a movie. When the tax forms finally came out, we were right, it was a sequel, much like Jaws the Revenge (1987).

Small employers that offer self-insured health plan coverage must file the Form 1094-1095 “B” series. As we will see, the B series isn’t too bad. But applicable large employers must file the Form 1094-1095 “C” series. That’s where we hit some bumps in the road. In both cases, Form 1094 is a transmittal form that provides some basic information on the employer to the IRS. Forms 1095 must generally be furnished and filed to both individuals enrolled in the plan and the IRS, though some reporting relief is available (see below). Applicable large employers must also furnish and file a Form 1095-C for every employee who was a full-time employee during any month of the calendar year, whether or not they were offered or enrolled in coverage.

Let’s begin with a couple of IRS terms.  You file tax forms with the IRS.  You furnish tax forms to individuals.  It’s important to know the difference between filing and furnishing, because different timelines apply. 

Both small and large employers with self-funded group health plans must file Forms 1094 and 1095 with the IRS by February 28 if filing on paper (or March 31 if filing electronically) of the year following the calendar year to which the return relates. Small employers file Forms 1094-B and 1095-B.  Applicable large employers file Forms 1094-C and 1095-C.  You can get an automatic 30-day extension of time to file by completing Form 8809 and filing it with the IRS on or before the due date for filing these forms.  Form 8809 may be submitted on paper or electronically.

The ACA was originally designed to impose penalties on people who didn’t buy health insurance. But people don’t like being told how to spend their money, and everyone knew that Congress would eventually relent if they wanted to keep their seats.  Sure enough, the Tax Cuts and Jobs Act reduced the individual shared responsibility payment amount to zero for months beginning after December 31, 2018.[1] This in turn led to much debate about whether the ACA itself must be rescinded, which was eventually resolved in favor of the ACA in the Supreme Court decision of California v. Texas.[2] That bit of history makes for good campfire stories among employee benefits lawyers, but we’ll spare you the details here. 

Employers and reporting entities quickly pointed out that in the absence of the employee shared responsibility penalty, people didn’t need Forms 1095-B or C to complete their income tax returns.  We think the most appropriate response for an efficient and well-run government would be to eliminate the requirement to furnish these forms to individuals.  But that would require a law change.  Instead, the IRS issued guidance suspending the penalty against a reporting entity for failing to furnish Form 1095-B (for employees of small employers) and 1095-C (for part-time and former employees of applicable large employers) when two conditions are met.[3]  First, a reporting entity must post a notice prominently on its website stating that responsible individuals may receive a copy of their Form 1095-B (or 1095-C) upon request, accompanied by an email address and a physical address to which a request may be sent, along with a telephone number that responsible individuals may use to contact the reporting entity with any questions. Second, a reporting entity is required to provide a Form 1095-B (or 1095-C) to a responsible individual upon request within 30 days of the date the request is received.  As to delivery of the form on request, the IRS requires that forms provided via email meet complex requirements and conditions. [4]  Since virtually no one will request these forms, you’re best off just sending them first class mail.