Two laws that provide ACA reporting relief to employers were recently passed by Congress. They were signed into law by President Biden on December 23, 2024. While the bulk of the ACA reporting requirements remain unchanged, these laws do provide some relief for employers. The new rules allow for electronic distribution and eliminate some of the most common employer headaches.
Electronic Form 1095-C Distribution
The Paperwork Burden Reduction Act (HR 3797) amends the ACA by codifying existing IRS rules that excuse employers from having to mail paper copies of Form 1095-C to all employees covered under their health plan. Previously, employers were required to send 1095-C forms to each covered employee to show proof of minimum essential coverage. There are three key takeaways:
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The employer must provide notice to individuals of their right to request a paper copy of the form. Specifically, the employer's website must contain a “clear and conspicuous notice” that employees may receive paper copies on request.
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If requested, the form must be provided by January 31 or 30 days after the date of the request, whichever is later.
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Assuming the above criteria are met, employers may default to providing 1095-C forms electronically.
Can Use Birthdates if SSNs are Not Available
The Employer Reporting Improvement Act (HR 3801) introduces the following changes relating to employer ACA reporting:
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Employers may substitute any covered individual's birthdate for the person's Taxpayer Identification Number if the reporting entity has been unable to collect that Tax ID Number.
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Employers now have 90 days (instead of the current 30 days) to respond to proposed IRS assessments (the dreaded Letter 226-J) for alleged violations of the Employer Shared Responsibility rules.
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The Act sets a six-year statute of limitations for Employer Shared Responsibility assessments. The IRS’s current position is that no statute of limitations applies to Employer Shared Responsibility assessments.
Effective Date
The new relief applies to the 2024 calendar year reporting. This means Form 1095 statements due to individuals on March 3, 2025, can be sent electronically (unless an individual requests a paper copy and presumes the employer has provided the required notice.)
What about State Reporting?
This relief only applies to federal reporting. Four states have individual mandate reporting requirements and allow plan sponsors to use the federal Form 1095 (and Form 1094) to satisfy the state reporting requirements. Those states are California, New Jersey, Rhode Island, and Washington, DC. Each state will need to determine whether the new rule allowing electronic delivery will cascade down to state reporting or whether self-funded employers in those states will still be required to provide paper copies.
References
Paperwork Reduction Act
Employer Reporting Improvement Act
