Legislation Reduces Burden of Employer Reporting

Congress recently passed two bills, signed into law by President Biden on December 23, 2024, that aim to reduce the employer reporting burden related to the Affordable Care Act (ACA). These bills significantly simplify employer and carrier responsibilities for Form 1095-C and Form 1095-B reporting.

Paperwork Burden Reduction Act

This act introduces an alternative furnishing method for Forms 1095-C and 1095-B, providing more flexibility for employers and carriers.

Key Updates:

  • Employers are no longer required to furnish these forms to covered individuals unless requested.

  • Requests for forms must be fulfilled by the later of January 31 or 30 days after the request is made.

  • Employers must provide timely notice of this option (guidance on notice language is forthcoming).

Important Notes:

  • This law applies to statements for returns filed after 2023, meaning it applies to 2024 reporting.

  • Even if forms are only furnished upon request, they must still be filed with the IRS along with Form 1094-C by March 31, 2025.

State-Specific Reporting Requirements

States like California, Massachusetts, New Jersey, Rhode Island, and the District of Columbia have individual health insurance mandates with additional reporting requirements:

  • Most states accept federal Forms 1095-C and 1095-B.

  • Massachusetts requires reporting via a separate Form 1099-HC, which is not impacted by federal changes.

Employers should await state-specific guidance or continue previous reporting practices (e.g., by mail).

Employer Reporting Improvement Act

This bill introduces several provisions to ease employer reporting responsibilities:

  • Date of birth can now be used in place of a tax identification number on Forms 1095-C or 1095-B when unavailable.

  • Employers can furnish forms electronically if the individual has consented to electronic delivery.

  • Employers now have 90 days (instead of 30 days) to respond to IRS Letter 226-J, effective for assessments proposed in taxable years starting after 2023.

  • A 6-year statute of limitations is established for shared responsibility penalty assessments (previously, no limit existed).

Employer Action Steps

  1. Form 1095-C Reporting for CY 2024:

    • Due by March 3, 2025.

    • Consider leveraging the relief to furnish forms only upon request, ensuring notice is provided to employees.

    • Absent guidance, employers in states with individual mandates may still need to furnish forms as in prior years.

  2. IRS Letter 226-J:

    • Confirm response deadlines, as the extended timeframe applies only to assessments for calendar years 2024 and beyond.

Employers may also choose to transition to the "opt-in" furnishing method for 2025 reporting (due in 2026) once guidance is issued.

Dexter Dible