Sponsorship of group health plans is welcomed by Congress and regulators, which should ease the burden of health plan administration and reporting. The relief comes in the form of a permanent extension of certain Affordable Care Act (ACA) reporting deadlines, a temporary waiver of new prescription drug reporting requirements, and a continuation of two years of compatible high deductibles under the ability to provide telehealth and telenursing services under the HSA- health plan.
ACA Report: 2022 and Beyond
In December, the IRS issued final rules regarding reporting requirements under the ACA. Each year, health plans, insurance companies, and applicable large employers (ALEs) (employers with at least 50 full-time equivalent employees) are required to provide participants and employees with individual statements and file with the IRS about the health coverage they provide. Providers of minimum essential coverage (ie, health plan sponsors and insurance companies) must provide participants with a personal statement on Form 1095-B. Program sponsors must also file a copy of the individual statement with the IRS under the cover of a transmitted Form 1094-B.
ALEs must provide employees with individual statements on Form 1095-C and must file a copy of the statement with the IRS under the cover of a transmitted Form 1094-C.
Forms 1095-B and 1095-C – Individual Returns Due March 2, 2023
Historically, separate statements for Forms 1095-B and 1095-C have been due by January 31 of the calendar year following the calendar year in which coverage is reported. However, over the past few years, the IRS has extended this deadline by 30 days. In its proposed regulations for 2021, the IRS appears poised to make this 30-day extension permanent, and with the final regulations in December 2022, the service has already done just that.
For 2022 reporting, Forms 1095-B and 1095-C must be filed by March 2, 2023. In future years, the deadline will continue to be March 2, consistent with the final rule. (In years when March 2 falls on a weekend or holiday, the deadline is the next business day).
Forms 1094-B and 1094-C – IRS filing deadline is March 31, 2023
The final rule will not change the deadlines for filing Forms 1094-B and 1094-C with the IRS. Filers must submit a copy of their individual return along with Form 1094-B or 1094-C by March 31 (if filing electronically). Filers who need more time to file with the IRS must file Form 8809 by the deadline to receive an automatic 30-day extension.
Alternative Distribution Method for Form 1095-B
The final rule also provides an alternative method for providing Form 1095-B to individuals. Typically, plan sponsors provide Form 1095-B by mail or in accordance with the electronic distribution rules. Under the final rule, plan sponsors can now post a “clear and conspicuous notice” on their website telling individuals how to request a copy of Form 1095-B and providing contact information. The final rule contains specific instructions regarding alternative distribution methods for Form 1095-B, as well as examples of safe harbors for required notifications. The plan sponsor must provide the Form 1095-B within 30 days of the individual’s request.
This alternative allocation method generally does not apply to Form 1095-C, except in limited circumstances for non-employees and part-time employees.
farewell to goodwill relief
In previous years, the IRS provided “transitional good faith relief,” in which plan sponsors and employers were not penalized if they demonstrated good faith efforts to comply with ACA reporting requirements. This good faith relief expires after 2020, and the final rule confirms that such interim relief has been eliminated. Program sponsors and employers who fail to properly complete the form and meet the reporting requirements will now be required to provide a reasonable justification to qualify for the penalty waiver.
Group health plan reporting on prescription drug and health care spending extended through January 31, 2023
Section 725 of ERISA (added by the Consolidated Appropriations Act of 2021) requires group health plans to submit detailed online reports through the CMS Health Insurance Oversight System, including specific information related to the plan’s prescription drug spending. (Parallel reporting requirements of the Internal Revenue Code and the Public Health Service Act apply to non-ERISA group health plans.) Initial reports should be filed no later than December 27, 2022 and cover related plans for 2020 and 2021 information.
The Departments of Labor, Health and Human Services, and Treasury have jointly issued guidance (in the form of an FAQ) extending this deadline to December 23, 2022. FAQs provide welcome assistance for employers and plan sponsors with first-time submissions, including:
- A grace period until January 31, 2023, during which to complete the initial submission; and
- A commitment not to take enforcement action against a program that has made good faith efforts to comply.
In addition, the FAQs provide flexibility regarding the data that must be included in the first round of reporting.
While many employers and plan sponsors will rely on their third-party administrators or insurers to submit the required information, plans are ultimately liable for any failure to meet their reporting obligations. Employers and program sponsors should confirm with their reporting entities that applicable reports have been filed by the end of the grace period provided in the FAQ.
First dollar coverage for non-HDHP-compliant telehealth and telecare services extended through December 31, 2024
The CARES Act establishes a safe harbor that allows HSA-compatible high-deductible health plans (HDHPs) to offer first-dollar coverage for telehealth and telecare services without compromising participants’ ability to make HSA contributions. This safe harbor was extended by the Omnibus Appropriations Act of 2022, but was originally scheduled to expire on December 31, 2022. Without this safe harbor, an HSA-compatible HDHP may not be able to pay any medical expenses until the participant meets the applicable deductible.
The recently enacted 2023 Omnibus Appropriations Act expanded HDHP’s ability to provide first-dollar coverage for telehealth and telenursing services during program years after December 31, 2022 and before January 1, 2025. Calendar year HDHP can therefore continue to provide first dollar coverage for telehealth and telenursing services throughout the 2023 and 2024 plan years. Non-calendar year HDHPs must carefully consider the gap created by legislation that would not allow first dollar coverage for telehealth and telenursing services in the fall of 2023 for any of the remaining months of the 2022 plan year. Employers and plan sponsors should review their plans carefully, as many plan documents may need to be amended to provide telehealth coverage extensions.
Laura L. Fischer is an attorney with Spencer Fane in Denver. Natalie Miller is an attorney with Spencer Fane in Overland Park, Kansas. © 2023 Spencer Fane. all rights reserved. Republished with permission.