Sponsors of group health plans have received a welcome relief from Congress and regulatory agencies that should ease the administration and reporting of health plans. The relief comes in the form of a permanent extension of some Affordable Care Act (ACA) reporting deadlines, a temporary suspension from new prescription drug reporting requirements, and a two-year continuation of the ability to offer telehealth services and remote care under the HSA- high-deductible compatible health plans.
ACA Reporting: 2022 and later
In December, the IRS released final regulations on reporting obligations under the ACA. Each year, health plans, insurers and applicable large employers (ALEs) – employers with at least 50 full-time equivalent employees – are required to provide individual returns to participants and employees and complete a filing with the IRS about the health coverage they offer. Minimum essential coverage providers, that is, health plan sponsors and insurers, must provide individual statements to participants using Form 1095-B. Plan sponsors must also file copies of individual returns with the IRS under cover of the 1094-B reporting form.
ALEs must provide individual statements to employees using Form 1095-C and must send copies of the statements to the IRS under cover of the 1094-C reporting form.
Forms 1095-B and 1095-C—Individual Returns Due March 2, 2023
Historically, individual returns on Forms 1095-B and 1095-C had to be due by January 31 of the year following the calendar year for which coverage is being reported. However, in recent years, the IRS has issued 30-day extensions to this deadline. In its proposed regulations for 2021, the IRS appeared poised to make this 30-day extension permanent, and with its final regulations in December 2022, the service has done just that.
For the 2022 reporting, Forms 1095-B and 1095-C must be provided by March 2, 2023. In future years, the deadline will continue to be March 2, in line with the final legislation. (In years where March 2 falls on a weekend or public holiday, the deadline will be the next business day).
Forms 1094-B and 1094-C — IRS Submissions by March 31, 2023
The final settlement does not change the deadline for filing Forms 1094-B and 1094-C with the IRS. Depositors must continue to submit copies of individual returns along with Form 1094-B or 1094-C by March 31 (if filing electronically). Filers who request more time to file with the IRS must file Form 8809 before the due date to receive an automatic 30-day extension.
Alternate method of distribution for Form 1095-B
The final regulations also provide an alternative method for providing 1095-B forms to individuals. Typically, plan sponsors provide Forms 1095-B by mail or under electronic distribution rules. Under the final regulation, plan sponsors can now post a “clear and conspicuous notice” on their website telling people how to request a copy of Form 1095-B and providing contact information. The final regulations contain specific instructions on alternative distribution methods for Form 1095-B, as well as an example of a safe haven for the required notice. Plan sponsors must provide Form 1095-B within 30 days of an individual’s request.
This alternative distribution method generally does not apply to Forms 1095-C, except in limited circumstances for non-employees and non-full-time employees.
Goodbye rescue in good faith
In previous years, the IRS offered “good faith bridging relief” under which no penalties were imposed on plan sponsors and employers who demonstrated a good faith effort to comply with the ACA’s reporting requirements. This bona fide relief expired after 2020 and the final regulation confirms that this transitional relief has been removed. Plan sponsors and employers who fail to fill out forms correctly and fail to meet reporting requirements will now be required to demonstrate a reasonable cause to be eligible for fine waiver.
Group Health Plan reporting on prescription drug and health care spending extended through January 31, 2023
ERISA Section 725 (as added by Appropriations Act, 2021) requires group health plans to submit detailed online reports through the CMS health insurance oversight system, including specific information regarding prescription drug spending of the plan. (Parallel reporting requirements under the Internal Revenue Code and the Public Health Services Act apply to non-ERISA group health plans). .
The Departments of Labor, Health, and Human Services and the Treasury jointly issued guidance (in the form of an FAQ) extending this deadline to December 23, 2022. The FAQs provide welcome relief for employers and plan sponsors to the initial presentation, including:
- A grace period until January 31, 2023, in which to complete the initial submission; And
- A pledge not to take enforcement action against plans that have made a good faith effort to comply.
Additionally, the FAQs provide flexibility as to what data should be included in this first round of reporting.
While many employers and plan sponsors will rely on their third-party administrators or insurance companies to send you the requested information, the plan is ultimately responsible for any failure to meet its reporting obligations. Employers and plan sponsors must confirm with their reporting entities that the applicable report has been submitted by the end of the grace period set out in the FAQs.
First dollar coverage of telehealth and remote care services with non-compatible HDHPs extended through December 31, 2024
The CARES Act established a safe haven that allowed HSA-compliant High-Deductible Health Plans (HDHPs) to provide first-dollar coverage of telehealth and remote care services without compromising participants’ ability to make HSA contributions. This safe haven was extended by the Consolidated Appropriations Act 2022, but was due to expire on 31 December 2022. In the absence of this safe haven, HSA-compliant HDHPs may not cover any healthcare costs until participants meet the applicable deductible.
The recently enacted Consolidated Appropriations Act, 2023, extended HDHPs’ ability to provide first-dollar coverage of telehealth and remote care services for plan years beginning after December 31, 2022 and before January 1, 2025. therefore, it can continue to provide first-dollar coverage of telehealth and remote care services during the 2023 and 2024 plan years. Non-calendar year HDHPs must be careful to account for the gap created by legislation, which does not allow first dollar coverage of telehealth and remote care services for all remaining months in the 2022 plan year falling in 2023. Employers and plan sponsors should review their plans carefully, as many plan documents will likely require changes to anticipate this extension of telehealth coverage.
Laura L. Fischer is an attorney with Spencer Fane in Denver. Natalie Miller is an attorney for Spencer Fane in Overland Park, Kan. © 2023 Spencer Fane. All rights reserved. Republished with permission.