On December 23, 2024, President Biden signed into law two bills that will simplify employer reporting compliance under the Affordable Care Act (ACA). The new laws streamline the rules for employers furnishing ACA reporting forms to covered individuals.
The Paperwork Burden Reduction Act
The Paperwork Burden Reduction Act eliminates the requirement for employers and insurers to automatically distribute ACA reporting forms to employees. The new law now allows insurers and employers to furnish Forms 1095-B and 1095-C to employees upon request. IRS guidance previously allowed Form 1095-B to be furnished to individuals upon request, but Form 1095-C was required to be provided in paper form automatically. The act amends the Internal Revenue Code to codify the rule for Form 1095-B and extend the rule to Form 1095-C.
If a covered individual requests a Form 1095-B or 1095-C, the health insurance provider or employer must furnish the requested form by the later of January 31 of the year following the calendar year for which the return was required to be made or 30 days after the date of the request.
The act requires that employers and health insurance providers “provide clear, conspicuous, and accessible notice (at such time and in such manner as the Secretary may provide)” that a covered individual may request a copy of the form. It is unclear when the IRS will provide guidance on these notice requirements.
Forms 1095-B and 1095-C still have to be filed with the IRS, and employers and health insurance providers must be sensitive to compliance with any applicable state reporting and disclosure requirements.
The Employer Reporting Improvement Act
The Employer Reporting Improvement Act simplifies the employer reporting process under the ACA when a covered individual’s tax identification number (TIN) is unavailable (most often occurring with dependents). The act codifies existing IRS regulations that allow for using an individual’s date of birth as a substitute for their TIN and enables electronic distribution of ACA forms with individual consent. These changes are expected to reduce administrative burdens for employers related to ACA reporting.
Additionally, and more importantly to employers, the act requires the IRS to give applicable large employers at least 90 days to respond to 226-J letters that issue a proposed employer shared-responsibility payment. Previously, employers had only 30 days to respond. Finally, the act establishes a six-year statute of limitations for collecting these payments.
Aside from the changes specified in the acts, all other ACA reporting requirements will remain the same. The changes made by the acts (e.g., the six-year statute of limitations) apply to forms required to be filed after December 31, 2024.
If you have any questions about your compliance with ACA reporting or any of the developments mentioned above, please reach out to your Morgan Lewis contact(s).