ACA reporting deadline extended — but employers should stay focused to avoid penalties

About a month ago, and just months before the reporting deadlines required under the Affordable Care Act (ACA) were set to go into effect, the Internal Revenue Service gave us all a late Christmas present and announced that it would extend the deadlines.

Under the ACA, health insurers, self-insured employers, government agencies and other providers of minimum essential coverage are required to annually file information returns with the IRS and furnish statements to individuals regarding the coverage provided. The ACA also requires certain large employers – generally those with 50 or more full-time equivalent employees – to annually file information returns with the IRS and furnish statements to individuals relating to the coverage that the employer offers, or does not offer, to its full-time employees. These reporting requirements are first required for the 2015 calendar year.

New deadlines

The deadline for furnishing 2015 statements to individual insureds and/or employees was extended from February 1, 2016, to March 31, 2016. The deadline for filing the 2015 returns with the IRS was extended from Feb. 29, 2016 to May 31, 2016, for those filing via paper; and from March 31, 2016, to June 30, 2016, for those filing electronically.

Non-compliance penalties

We were all happy to see the deadlines extended, and likely quickly shifted our focus on to other year-end and first quarter deadlines. It is very important though, especially because the IRS gave us some more time, to meet the new deadlines. Indeed, employers and other coverage providers that do not comply with the extended deadlines are subject to financial penalties unless they can show reasonable cause for missing the deadlines.

When the IRS extended the deadlines, it indicated that it will take into account certain factors in evaluating whether there is reasonable cause, including whether the employer gathered and transmitted the reporting data to an agent for submission to the IRS, whether the employer tested its ability to transmit the information to the IRS prior to the deadline, and whether the employer is working to meet the reporting requirements for 2016.