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Article | Insider

New laws ease ACA employer mandate reporting

By Ann Marie Breheny and Anu Gogna | January 14, 2025

The Biden administration signed into law the Paperwork Burden Reduction Act and the Employer Reporting Improvement Act changing reporting requirements related to employer-offered health coverage.
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The Paperwork Burden Reduction Act and the Employer Reporting Improvement Act were enacted in December 2024. Both laws ease the burden of reporting under the Affordable Care Act (ACA) mandate requiring applicable large employers (ALEs) to offer health insurance to full-time employees and their dependents and provide an annual statement on the available coverage. The Employer Reporting Improvement Act also gives employers more time to respond to an initial notice of an employer mandate penalty from the IRS and establishes a statute of limitations for employer mandate penalties. The provisions, noted below, took effect at the beginning of 2025.

Paperwork Burden Reduction Act

The Paperwork Burden Reduction Act allows ALEs to furnish the required statement — IRS Form 1095-C (Employer-Provided Health Insurance Offer and Coverage) — to individuals only upon request rather than annually. Employers must give “clear, conspicuous, and accessible notice” that employees may request the statement. Once a request is received, employers have until January 31 of the year after the calendar year to which the statement relates or 30 days after the request, whichever is later, to provide Form 1095-C.

The provision is effective for returns for calendar years after 2023, though ALEs do not yet have guidance on the notice requirement or other provisions of the law.

The act also codifies existing guidance allowing the IRS Form 1095-B (Health Coverage) to be provided only upon request. Under that guidance, the reporting entity must provide a clear and conspicuous notice, in a location on its website that is reasonably accessible to all responsible individuals, stating that responsible individuals may receive a copy of the form upon request. The notice must:

  • Include an email address, a physical address to which a request for a statement may be sent and a telephone number that can be used to contact the reporting entity with any questions
  • Be written in plain, nontechnical terms and with letters of a font size large enough, including any visual clues or graphical figures, to call to a viewer's attention that the information pertains to tax statements reporting that responsible individuals had health coverage
  • Be posted on the reporting entity’s website by the applicable deadline (i.e., March 2) and retained in the same location on its website through October 15 of the year following the calendar year to which the statements relate (or the next business day if October 15 falls on a Saturday, Sunday or legal holiday)

Statements furnished under these rules may be provided electronically if the individual has consented to electronic delivery.

The act does not change the rules that govern ALE reporting to the IRS, and it does not affect reporting requirements in states that require reporting on the Form 1095-C to enforce their own minimum essential coverage mandates.

Employer Reporting Improvement Act

The Employer Reporting Improvement Act addresses reporting and penalties under the ACA employer mandate.

ALEs failing to provide health insurance coverage as required under the ACA may receive an initial letter from the IRS (Letter 226-J) that starts the enforcement and penalty assessment process. The Employer Reporting Improvement Act:

  • Extends the time employers have to respond to Letter 226-J to 90 days — up from 30 days previously (effective for assessments in taxable years beginning after December 23, 2024)
  • Establishes a statute of limitations on employer shared responsibility assessments: six years beginning on the later of the due date of the ALE’s return under Internal Revenue Code section 6056 or the date the return is filed (effective with respect to returns due after December 31, 2024)

The act also codifies reporting relief that was issued through IRS guidance. It:

  • Codifies guidance allowing the use of an individual’s name and date of birth when the reporting entity is unable to collect a taxpayer identification number (effective for returns with due dates after December 31, 2024)
  • Codifies rules providing electronic distribution of Forms 1095-C and 1095-B with individual consent (effective for statements with due dates after December 31, 2024)

Going forward

  • ALEs should determine whether they want to continue furnishing Form 1095-C annually or furnish it only upon request and begin taking steps to comply with the notice and process requirements.
  • Employers should note they now have 90 days to respond if they receive a Letter 226-J.

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