Recent legislative changes have introduced modifications to the Affordable Care Act (“ACA”) employer reporting requirements under Sections 6055 and 6056. These adjustments aim to streamline compliance processes for employers and are effective for the 2024 reporting year, with returns due in early 2025.
New Legislation
On Christmas Eve, President Biden signed two significant pieces of legislation into law: the Employer Reporting Improvement Act (H.R. 3801) and the Paperwork Burden Reduction Act (H.R. 3797). These laws address some of the long-standing challenges employers face when complying with ACA reporting requirements.
The Employer Reporting Improvement Act
The Employer Reporting Improvement Act introduces greater flexibility in how employers report Tax Identification Numbers (“TINs”) or Social Security Numbers (“SSNs”) for individuals covered under self-funded group health plans. Previously, employers needed to make multiple attempts to collect accurate TINs/SSNs before using an individual’s date of birth as an alternative. Under the new law, employers can now use a date of birth without the need to establish reasonable cause, significantly reducing the administrative burden and minimizing reporting errors.
Additionally, this law extends the time employers have to respond to IRS enforcement notices. Employers now have a minimum of 90 days to address proposed employer shared responsibility penalties outlined in IRS Letter 226J. It also establishes a six-year statute of limitations on the IRS’s ability to impose penalties, offering employers greater clarity and protection regarding enforcement timelines.
The Paperwork Burden Reduction Act
The Paperwork Burden Reduction Act simplifies the distribution of Forms 1095-B and 1095-C. Employers can satisfy distribution requirements by posting a clear and accessible notice that the forms are available upon request, rather than automatically distributing them to all employees. This change allows employers to focus resources on employees who need the forms, while still ensuring compliance.
Key Takeaways
- Optional Distribution of Form 1095s: Employers can now provide a notice of availability for Forms 1095-B and 1095-C instead of automatically distributing them. Upon request, employers must furnish the forms by January 31st or within 30 days of the request, whichever is later.
- Flexibility in Reporting TINs/SSNs: Employers reporting self-funded group health plan coverage can use an individual’s date of birth if a TIN/SSN is unavailable, without the previous requirement of making multiple collection attempts.
- Extended Response Time for IRS Notices: Applicable Large Employers (“ALEs”) now have at least 90 days to respond to IRS Letter 226J, and a six-year statute of limitations has been established for penalty enforcement.
State-Level Reporting Requirements
These federal changes do not affect state-level reporting obligations. Employers subject to state mandates in California, Massachusetts, New Jersey, Rhode Island, or the District of Columbia should verify whether similar relief measures are available for the 2024 reporting year.
Upcoming Deadlines
- Forms 1095 must be distributed to full-time employees and covered individuals by March 3, 2025.
- Forms 1094, along with all Forms 1095, must be submitted electronically to the IRS by March 31, 2025.
Steps for Employers
- Review and Update Compliance Procedures: Assess your current ACA reporting processes to incorporate these changes, ensuring timely and accurate compliance.
- Prepare Notices for Form Availability: Develop and disseminate the required notices informing employees of the availability of Forms 1095 upon request.
- Monitor State Regulations: Stay informed about any state-specific reporting requirements that may differ from federal guidelines.
Our team specializes in navigating complex compliance matters and is here to assist you in understanding and implementing these changes. Please contact us for support to ensure your employee benefit plans remain compliant with the latest regulations.
Additional Resources:
State Individual Coverage Mandate Resources:
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