ACA Reporting Requirements Updated

Changes to simplify Affordable Care Act (ACA) reporting are included in the Employer Reporting Improvement Act and the Paperwork Burden Reduction Act, enacted late in December 2024.

The new requirements apply to the 2024 Form 1095 due in 2025. Some of the new statutory provisions are a codification of procedures found in existing Internal Revenue Service (IRS) rules.

Form 1095

Employers are required to continue to prepare and file Form 1095-C or Form 1095-B with the IRS. Electronically submitted forms are generally due by March 31. The new rule doesn’t change the IRS filing requirement but eliminates the requirement for employers to distribute the forms to all full-time employees. Forms only need to be provided to an employee upon request.

Employers must notify employees of their right to request forms in a clear and accessible manner. If an employee requests a copy of a form, it must be provided within 30 days, or if later, January 31 following the end of the year to which the form relates.

Employers may distribute a requested form electronically if the employee consents. An employee’s consent to receive electronic forms is valid until the consent is withdrawn in writing.

As of publication, specific instructions on the content, manner, or timing of the notice to employees regarding their right to request forms have not been issued. Preexisting rules have an automatic 30-day extension, so until new guidance is issued, employers may continue to distribute notices to employees. Employers wanting to take advantage of the employee request option should consult with legal counsel to ensure the methods chosen for notification and distribution align with IRS instructions for Form 1095 for part-time and non-employees and will comply with the new rules.

Reporting of Taxpayer Identification Number (TIN)

Employers and plan sponsors issuing Form 1095-C for self-insured plan coverage of spouses and dependents are now permitted to report an individual’s full name and date of birth on Form 1095-C if the individual’s TIN or Social Security number (SSN) is not available. This applies to Section III of the 1095-C. The SSN is still required for employer reporting in Parts I and II.

Penalties and Payments

The timeframe for employers to respond to proposed assessment of ACA penalties increased from 30 to 90 days. This new time limit applies to assessments proposed in taxable years beginning after December 23, 2024. This allows employers more time to address and correct any issues, such as coding errors, before penalties are assessed.

A six-year statute of limitations now applies to IRS assessment and collection of ACA penalties, effective for returns due after December 31, 2024. The six-year period runs from the due date for the return or the return filing date, if later.

Action Steps

The following steps will allow employers to take advantage of the new reporting requirements:

• Update processes and post notice of employees’ right to request forms as soon as the IRS issues guidance addressing the content and steps for responding to requests. Once guidance is issued, establish a process for timely response to requests and posting of annual notices.
• Prepare and file Form 1095-C and 1095-B as required with the IRS by March 31.
• If you are the sponsor of a self-insured plan, obtain full names and dates of birth if you do not have an SSN or TIN.