Compliance FYI: Changes to ACA Reporting Requirements
IRS Notice 2025-15 provides additional guidance on how employers can provide a notice that the 1095-C/1095-B is available upon request rather than sending out the actual 1095-C/1095-B as permitted by the Paperwork Burden Reduction Act discussed below.
Specifically, the notice must:
- Provide clear and conspicuous notice stating that a copy of their 1095-C/1095-B is available upon request;
- Be posted the employer’s website in a place that is reasonably accessible to all individuals needing to receive a 1095-C/1095-B;
- Include an email address, physical address, and a telephone number for an individual to request their 1095-C/1095-B and ask questions;
- Be written in plain, non-technical terms with font size large enough to call attention to the contents of the notice; and
- Be posted by the due date for providing the 1095-C/1095-B to employees and remain posted in the same location until October 15th.
If requested, an employer must provide the actual 1095-C/1095-B within 30 days.
On December 23rd, 2024, President Biden signed two bills, H.R. 3797 and H.R. 3801, into law. These laws change requirements for employers completing Affordable Care Act (ACA) reporting.
H.R. 3797 Paperwork Burden Reduction Act
Prior to the passage of H.R. 3797, employers had to furnish Form 1095-C/1095-B for the preceding calendar year to employees by March 2. Employers either provided a paper copy of the 1095-C/1095-B or obtained consent to send the 1095-C/1095-B electronically.
H.R. 3797 provides employers with an alternative option for furnishing the 1095-C/1095-B. For calendar year reporting post-2023 (i.e. 2024), an employer will be treated as furnishing the Form 1095-C/1095-B if they:
- Post a clear, conspicuous, and accessible notice that any individual who otherwise would be required to get a Form 1095-C/1095-B may request a copy of the 1095-C/1095-B; and
- The employer provides a copy of the 1095-C/1095-B upon request no later than:
- January 31 of the year following the calendar year for which the reporting is completed; or
- 30 days after the request for the Form 1095-C/1095-B.
The changes made by H.R. 3797 do not affect the requirement to file Form 1095-Cs/1095-Bs electronically with the IRS by March 31 annually.
H.R. 3801 Employer Reporting Improvement Act
H.R. 3801 makes several changes to employer ACA reporting obligations. These changes include:
- Tax Identification Number Substitution—Employers may substitute an individual’s full name and date of birth if the employer is unable to collect the tax identification number (TIN) of the individual.
- Electronic Distribution—Employees may consent to receiving Form 1095-C electronically. While already permitted by Internal Revenue Service (IRS) regulation, H.R. 3801 codifies the electronic consent provisions.
- Time to Respond to Penalty Letter—Employers will have 90 days to respond to proposed employer shared responsibility (ESR) penalty in Letter 226-J, rather than the previous 30-day deadline.
- ESR Penalty Statute of Limitations—A six-year statute of limitations is imposed on ESR penalty assessments.
The TIN substitution, electronic distribution, and ESR penalty statute of limitations changes apply to returns with due dates after December 31, 2024. The increased response time for penalty letters is effective for taxable years beginning after the enactment of the law.
Key Takeaways:
Employers would be well served to review the updates to the ACA reporting requirements. Employers may find that some of these changes reduce the compliance burden of annual ACA reporting.
The information provided is a summary of laws and regulations relating to employee benefit plan compliance. This information should not be construed as legal advice. In all cases, employers should consult with their own legal counsel.
