New Rules for ACA Reporting Now in Effect

Employee Benefits & Executive Compensation

The Paperwork Burden Reduction Act and Employer Reporting Improvement Act were signed into law in late December of 2024, easing certain reporting requirements under the Affordable Care Act (ACA).  These employer-friendly changes apply to certain ACA annual filings for the 2024 reporting year and beyond, meaning employers are subject to the new procedures for 2024 calendar year reporting that is due in early 2025.

At a Glance

• Employers no longer need to distribute Forms 1095-B or 1095-C to employees, but can instead notify individuals about their right to request them. However, such statements must still be filed with the IRS.
• Forms 1095-B and 1095-C can be sent electronically with employee consent.
• Full name and birthdate can replace a tax identification number (TIN) for ACA filings if the TIN is unavailable.
• Applicable Large Employers (ALEs) that receive an IRS Letter 226-J related to reporting compliance now have 90 days to respond (extended from 30 days under the prior rules).
• A six-year statute of limitations will now apply to the assessment of any reporting penalties issued by the IRS (previously there was no statute of limitations).

Paperwork Burden Reduction Act

Previously, employers providing minimum essential healthcare coverage were required to send Forms 1095-B or 1095-C to employees and covered individuals.  Under the new rules, employers no longer need to automatically send these forms.  Instead, they may prepare the forms, make the required filings with the IRS, and notify individuals in a “clear, conspicuous, and accessible” manner (further guidance on the form of the notice is expected) of their right to request a copy.  If requested, the applicable form must be provided by the later of January 31 of the year following the reporting year or 30 days after the request.

Note, employers should also be aware that some states may have additional reporting requirements (e.g., California). 

Employer Reporting Improvement Act (ERIA)

The ERIA formalizes IRS regulations allowing employers and insurance providers to send Forms 1095-B and 1095-C electronically, provided the employee gives consent.  Any prior consent to receive these forms electronically will meet this new requirement, although employees can withdraw their consent in writing at any time. 

The ERIA also codifies IRS regulations permitting the use of an individual’s full name and date of birth as a substitute for a TIN (typically, the individual’s Social Security Number) for ACA-related filings when the TIN is unavailable. 

Additionally, the ERIA extends the time for ALEs to respond to a Letter 226-J from the IRS proposing an employer shared responsibility payment (ESRP) for an ACA coverage failure.  Previously, employers had only 30 days to respond, but the new deadline is 90 days.  This extended response period will apply to all Letters 226-J sent on or after January 1, 2025.

Finally, the ERIA establishes a new six-year statute of limitations for assessing and collecting ESRPs proposed in 226-J letters.  This period begins on the due date for filing the return or, if later, the date the return was actually filed.  Prior to this law, no statute of limitations existed for these assessments.

If you have any questions, please contact Jim Hoch (jhoch@wyrick.com), Clay Williams (cwilliams@wyrick.com), or Sarah Couillard (scouillard@wyrick.com) of our Employee Benefits & Executive Compensation group or your Wyrick Robbins contact.

NOTICE:  This Alert provides merely an overview and summary information regarding the requirements for these notices and filings and is not written advice directed at the particular facts and circumstances of any person or company.  Please note that not all potential details and nuances regarding these requirements and changes to law have been addressed, and this Alert does not involve analysis of specific facts concerning any specific company or reach any conclusion regarding tax or employee benefits issues for any specific individual or company.