As we turn the page to 2025, employers and HR professionals are turning their attention to ensuring compliance with the reporting and disclosure requirements of the Affordable Care Act (ACA). Traditionally, this process required preparing and mailing Forms 1095-B and 1095-C to all full-time employees—a time-consuming and labor-intensive task.

In a significant development, President Biden signed two new bills into law on December 23, 2024, marking a significant step forward in reducing reporting burdens for employers and health insurance providers. These legislative changes aim to streamline processes and make compliance more manageable as organizations navigate the evolving landscape of healthcare reporting.

Quick Hits

• Starting with ACA reporting for 2024, employers and health insurance providers are only required to send Forms 1095-B and1095-C to covered employees upon request.
• Employers can distribute Forms 1095-B and1095-C electronically.
• Employers now have ninety days to respond to 226-J letters.

Paperwork Burden Reduction Act

The Paperwork Burden Reduction Act (H.R. 3797) amends the ACA by eliminating the mandate for employers and health insurance providers to automatically distribute tax forms to individuals covered under their health plans. Previously, employers and insurers were required to issue Forms 1095-B and 1095-C to verify minimum essential coverage.

Under the revised provisions, these forms are now required to be issued only if a covered individual/employee specifically requests them. Once a request is made, the applicable form must be provided by the later of either January 31 of the year following the calendar year to which the form relates or thirty days after the date of the request. Furthermore, employers and insurance providers are now obligated to notify covered individuals of their right to request these statements, ensuring transparency and compliance. This change applies to reporting for calendar years beginning after 2023.

Employer Reporting Improvement Act

The Employer Reporting Improvement Act (H.R. 3801) builds on the Paperwork Burden Reduction Act by amending the ACA to permit employers and insurance providers to distribute Forms 1095-B and 1095-C electronically with an employee’s consent. Any prior consent to receive these forms electronically is deemed to satisfy this new requirement, although an employee may withdraw that consent in writing. The Employer Reporting Improvement Act also codifies Internal Revenue Service (IRS) regulations that allow an individual’s date of birth to be used as an alternative to a tax identification number (TIN) when a TIN is not available.

In addition, the act requires the IRS to grant employers a minimum of ninety days to respond to 226-J letters, extending the previous thirty-day deadline. Finally, it establishes a six-year statute of limitations for the collection of employer shared responsibility payments (ESRPs) proposed in 226-J letters, providing greater clarity and predictability for employers.

Next Steps

As employers and HR professionals prepare for 2025, the changes brought about by the Paperwork Burden Reduction Act and the Employer Reporting Improvement Act offer significant relief by simplifying ACA compliance processes. With the ability to distribute 1095-B and 1095-C forms electronically and send them only upon request, employers can reduce administrative burdens and enhance efficiency.

Additionally, the extended response time for 226-J letters and the establishment of a six-year statute of limitations for collecting ESRPs provide much-needed clarity and predictability. These updates represent a positive shift toward more streamlined and manageable healthcare reporting, allowing organizations to focus on meeting their compliance obligations with greater ease.