The Affordable Care Act reporting requirements are undergoing significant changes in 2025, thanks to the recently enacted Employer Reporting Improvement Act and Paperwork Burden Reduction Act. These changes simplify the reporting process for employers and reduce administrative burdens.

Key Changes

• Form 1095-C Distributed Only on Request: Employers are no longer required to distribute Form 1095-C to all full-time employees. Instead, these forms must only be provided upon request. Employers must notify employees of their right to request these forms, ensuring that the notice is clear and accessible. The IRS has not yet provided guidance on precisely when and how the notice must be distributed. If an employee requests a copy of Form 1095-C, it must be provided within 30 days or, if later, January 31 following the end of the year to which the form relates.
• TIN Flexibility: The IRS may now permit employers to report an individual’s full name and date of birth on Form 1095-C if the individual’s taxpayer identification number (TIN) cannot be obtained. Currently, employers may be subject to penalties for failing to obtain and report TINs on Forms 1095-C for covered persons, including for dependents who are enrolled in coverage. Many employers have faced great difficulties in obtaining TINs for this purpose, especially for dependents who are nonresident aliens with no social security number and no independent reason to obtain a TIN. The IRS has not yet issued guidance permitting employers to report the full name and date of birth if the TIN cannot be obtained.
• New Statute of Limitations: A six-year statute of limitations has been established for assessing and collecting employer shared responsibility payments. This change provides a clear timeframe for potential liabilities, offering more predictability for employers.
• Extended Response Time for IRS Penalty Letters: Employers now have at least 90 days to respond to IRS letters proposing assessments of employer shared responsibility payments, an increase from the previous 30-day window. This extension provides more time for employers to address and correct any issues, such as coding errors, before penalties are assessed.

Practical Implications

• Continue Filing Forms 1095-C: The forms must still be prepared and filed annually with the IRS, generally by March 31 of the following year.
• Notify Employees: Employers should stay aware of IRS guidance regarding the distribution of notices to employees regarding their ability to request a Form 1095-C. The IRS may publish a model notice for this purpose. Until then, employers should consider developing a suitable notice and establishing procedures for distributing the notice.
• Obtain Full Names and Dates of Birth: Although further IRS guidance is needed, employers who are struggling to obtain TINs may consider establishing a process to ensure they have or can obtain the full names and dates of birth for such individuals.