Important Changes to ACA Employer Reporting:

What You Need to Know

Overview of New Legislation

Two new bills affecting the Affordable Care Act (ACA) employer reporting under §§6055 and 6056 have been approved by Congress and are awaiting the President’s signature.

These changes aim to simplify the reporting process for employers. Here’s what you need to know:

1. Form 1095 Distribution Requirements: Effective for the 2024 Reporting Year – Employers can now meet the Form 1095 distribution requirements without automatically distributing 1095-C or 1095-B forms to individuals. However, the following action must be taken:
   • Post a notice of availability that’s “clear, conspicuous and accessible”– guidance will be issued with regards to what is needed to satisfy the notice requirement
   • Distribute the forms upon request of the individual by the later of January 31 or 30 days upon request.
2. Reporting for Self-Funded Plans: Effective for the 2024 Reporting Year – Employers reporting self-funded group health plan coverage for spouses and dependents can now use the individual’s date of birth if the tax identification number (TIN) is not available. This change eliminates the need to establish reasonable cause before using a date of birth.
3. ALEs who receive a Letter 226J from the IRS proposing employer shared responsibility penalties must be given at least 90 (previously 30) days to respond before the IRS takes any further action. In addition, there will now be a 6-year statute of limitations on the IRS’ ability to impose such penalties; previously there wasn’t a formal statute of limitations.

These changes only affect federal ACA employer reporting requirements. Employers in states with their own reporting requirements (CA, MA, NJ, RI, DC) may not benefit from this relief for the 2024 reporting year.

Legislative Details

• H.R. 3801 – Employer Reporting Improvement Act:
  • TIN/SSN Flexibility: Employers can now use a date of birth for reporting if the TIN/SSN is not available, without needing to establish reasonable cause.
  • Enforcement Timelines: Employers have at least 90 days to respond to IRS Letter 226J proposing penalties, and there is now a 6-year statute of limitations on imposing such penalties.
• H.R. 3797 – Paperwork Burden Reduction Act:
  • Form 1095 Distribution: Employers can satisfy distribution requirements by providing a clear, conspicuous, and accessible notice that the forms are available upon request. The IRS is expected to provide further guidance on this process.

Action Steps for Employers

• Review Reporting Processes: Starting with the 2024 calendar year 1095-C and 1095-B forms, employers may post a notice of availability to avoid automatic distribution to individuals.
  • Be sure to provide the form upon request by the later of Jan 31 or 30 days after the request.
• Update Employee Communications: We expect to receive IRS guidance addressing the notice requirement. After that, inform employees about the new distribution method for and ensure the notice meets the IRS requirements.
• Monitor IRS Guidance: Stay updated on any additional guidance from the IRS regarding these changes.

By understanding and implementing these changes, employers can streamline their ACA reporting processes and reduce administrative burdens. Stay informed and proactive to ensure compliance and avoid penalties.

IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information. This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.

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