The IRS recently released the final instructions for Forms 1094/1095-C and 1094/1095-B for the 2021 reporting year. With these final instructions, employers and insurers now have all the IRS documents needed to complete the 2021 reporting.

The 2021 final instructions mostly mirror the draft instructions that were released in October.

One of the key changes from 2020 reporting is the deadline for furnishing Forms 1095-B/C to individuals. The IRS has proposed that the deadline be permanently extended to 30 days after January 31, rather than the IRS extending the deadline each year. For 2021 reporting purposes, employers can rely on the proposed extension. Therefore, the date by which employers must distribute Forms 1095-B or 1095-C to individuals is now March 2, 2022, instead of the January 31, 2022 deadline. Keep in mind that the deadlines for employers to file the forms with the IRS remain the same. For filing by mail, the deadline is February 28, 2022. The deadline for electronic filing is March 31, 2022.

Another update from the prior years' reporting is that the good faith penalty relief for incorrect or incomplete information was eliminated permanently starting from the 2021 reporting. Therefore, employers should focus on accuracy and thoroughly completing the Forms 1094/1095-B and C for 2021 reporting since filers can no longer rely on this relief. Additionally, employers should retain all the supporting documents that were used to complete the forms in case of a proposed assessment.

Moreover, the 2021 instructions added two new codes (1T and 1U) to report individual coverage HRAs (ICHRA). Code 1T applies to ICHRAs offered to the employee and spouse but not dependents, with affordability determined using the employee's primary residence location zip code. Code 1U applies to ICHRAs using the employee's primary employment-site ZIP code affordability safe harbor.

Finally, the instructions permit insurers to provide Forms 1095-B to individuals in the prescribed alternative way rather than mailing a Form 1095 to each individual so long as an insurer provides clear and conspicuous notice, in a location on its website that is reasonably accessible, which states that a copy of their statement is available upon request. The insurer must retain the notice in the same location on its website through October 17, 2022. Similarly, self-insured employers can use the alternative way to furnish Forms 1095-C to cover non-full-time employees and nonemployees. For the details of the alternative way of furnishing Forms 1095, please refer to the respective instructions.

Employers should be aware of the new forms and instructions.

2021 Instructions for Forms 1094-C and 1095-C »
2021 Instructions for Forms 1094-B and 1095-B »
2021 Form 1094-C »
2021 Form 1095-C »
2021 Form 1094-B »
2021 Form 1095-B »