Posted by Jerry Karlin on January 18, 2017.
The Internal Revenue Service on November 18 issued Notice 2016-70*, which extends the due date—from January 31, 2017, until March 2, 2017—for insurers, self-insuring employers, and certain other providers of minimum essential health insurance coverage under Internal Revenue Code section 6055 and for applicable large employers under section 6056 to furnish the Form 1095-B and 1095-C to individuals for the 2016 tax year. (Sections 6055 and 6056 were added to the code as part of the Patient Protection and Affordable Care Act of 2010.)
The deadline for filing this form with the IRS will still be March 31, 2017, for those filing electronically, and February 28, 2017, for non-electronic filers. The IRS indicated in the notice that it recognizes how challenging it remains for many employers to gather the data required to complete the Forms 1095-C.
The reason for furnishing the Form 1095-C to individuals is so they can provide the information required by the IRS to establish compliance with the Affordable Care Act’s Individual Shared Responsibility rules, or to support their claims for a premium tax credit if they purchased coverage through a public health insurance exchange. The same form is filed with the IRS so the agency can determine what, if any, tax assessment applies to each month of the year. The granting of an extension by the IRS is perhaps an indication that some employers may be having difficulty capturing, analyzing, and performing the calculations necessary to also determine their exposure for the Employer Shared Responsibility Payment for any of the prior 12 months.
Despite 2016 being the second year in which reporting was required, several challenges may remain for employers to be in compliance. Many employers have expressed concern over obtaining accurate data to ensure proper code reporting in the amount of time provided by the original IRS deadline.
Employers should try to meet the original January 31, 2017, deadline, as employees will be requesting the forms in order to prepare their own tax returns, and the employers need the information to calculate their 2016 Employer Shared Responsibility Payment. Deferring the preparation of the forms results in another month of not knowing what liabilities may exist. If employers have been struggling to effectively gather and analyze the relevant data on a monthly basis during 2016, it may be time for them to address the processes they have in place. After all, it’s important for employers to understand their 2016 liability before they have to distribute the 2016 forms, but they should also start 2017 tracking of their coverage threshold on a month-by-month basis.
As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.