New Laws Aim to Ease ACA Reporting Burdens

Two new laws were passed on December 23, 2024, designed to make it easier for employers subject to the ACA’s reporting employer mandate to provide 1095-C and 1095-B forms to employees. These forms must be provided by:

1. Nearly all employers that offer a self-insured group health plan, and;
2. Employers that offer a fully insured plan and have 50 or more full-time employees.

What type of changes are being made?

One significant difference in the new ACA reporting is that starting with the reporting required in 2025 (for the 2024 calendar year), employers will be allowed to make 1095-C forms available to employees on request. They will no longer be required to mail the forms to employees, which may reduce costs. To utilize this option, employers will need to:

• Provide clear and accessible notice that any person who would otherwise be entitled to receive a copy of the forms may request one; and
• Providing a copy within 30 days of the request or, if later, by January 31.

The option to provide the 1095-B forms to employees upon request was already available to self-insured plans with fewer than 50 full-time employees. This change will apply to employers that have 50 or more full-time employees, regardless of whether their health plan is fully insured or self-insured.

The new laws’ additional changes include:

• Allowing employers to distribute 1095-C and 1095-B forms to employees electronically with prior consent (rather than mailing paper forms).
• Requiring the IRS to allow employers 90 days to respond to penalty letters for failure to satisfy the ACA’s employer mandate. These penalties are typically issued at least three years after the year for which penalties are being assessed, so it can take employers some time to locate all the relevant information for a response. 
• Imposing a six-year statute of limitations on the assessment of employer mandate penalties. Previously, there was no statute of limitations, which meant there was no time limit for the IRS to impose penalties on employers that failed to offer coverage to their employees as required by the ACA.
• Employers and health insurance providers will now be able to submit spouses’ and dependents’ names and date of birth on 1095-B and 1095 C filings rather than their social security numbers.

What to do moving forward

Clients may want to contact their ACA reporting vendor to determine whether they will be able to accommodate these changes in 2025. Since regulations have not yet been issued regarding these new requirements, we expect that some vendors will delay modifying their systems and services until the 2026 reporting period.  

If you want and are able to take advantage of the new distribution methods, you may also need to:

• Prepare and post the required notices (the IRS is expected to issue model notices, but in their absence, your vendor should be able to provide one)
• Obtain consent from employees for the electronic delivery of forms, if you choose to use that option.
• Update and train your team on the new processes and be prepared to answer questions from employees.