Form 1095 (ACA) COVID Penalty Refund

Form 1095-B and 1095-C (ACA health-coverage reporting) penalties under §6721 and §6722, assessed during Jan 20, 2020 – July 10, 2023, may be eligible for refunds under Kwong. Applicable Large Employers (ALEs) are most exposed. File Form 843 by July 10, 2026. Refund eligibility is not guaranteed; Kwong is being appealed.

Who qualifies

Employers subject to ACA reporting requirements file Form 1095-B (insurers) or 1095-C (Applicable Large Employers, generally those with 50+ FTEs) for each covered employee. Late or missing 1095 filings during the disaster window may have triggered §6721/§6722 penalties (same penalty framework as other information returns). Kwong's deadline-suspension reasoning may apply.

  • Account transcript shows §6721/§6722 penalty assessments tied to 1095 filings, dated between Jan 20, 2020 and July 10, 2023.
  • 1095s were due (typically Feb 28 paper / Mar 31 electronic to IRS, with employee/insured copy due Jan 31) within the disaster window.
  • ALEs typically have larger exposure due to per-employee filing volume.

How much could I get back?

ALE 1095 penalty exposure scales with covered-employee count. A 200-employee ALE that missed all 1095-Cs for one year could face $50,000+ in stacked penalties before any abatement. Multiple-year exposure compounds. Refund eligibility and amounts cannot be guaranteed.

Why this specifically

ACA 1095 reporting was disrupted significantly by pandemic-era HR and benefits operations changes. Many ALEs paid 1095-related §6721/§6722 penalties without challenging them. This is a high-leverage refund segment for any organization with a substantial covered-employee population during 2020–2022.

FAQ

Does this apply to 1094 transmittals as well?

1094 transmittals are typically penalized as part of the 1095 batch they accompany. Penalty assessments on either form during the disaster window may qualify; the account transcript shows the assessment, not the form variant.

What if the IRS sent a Letter 226-J (ESRP) instead of a §6721 penalty?

Letter 226-J Employer Shared Responsibility Payments are a different penalty regime under §4980H, not §6721/§6722. ESRP issues are outside this page's scope — consult a tax professional with ACA-specific experience.

Are individual mandate penalties on personal 1040 returns covered here?

No — the individual mandate penalty was zeroed out for tax years 2019 onward by the TCJA. This page covers employer/insurer reporting penalties, not the (now-zero) individual mandate.