President Joe Biden signed the Employer Reporting Improvement Act and the Paperwork Burden Reduction Act into law on December 23, 2024. These bills intend to make Affordable Care Act (ACA) reporting easier for employers by changing the requirements for distributing IRS Forms 1095-B and 1095-C to all employees and covered individuals.
Under the new legislation, employers no longer need to send employees a Form 1095-B or 1095-C unless the employee specifically requests it. However, to benefit from this change, Plan Sponsors must inform employees of their right to request a 1095 form. If an employee requests a Form 1095-B or 1095-C, the employer must provide the requested form by either January 31 or within 30 days of the request, whichever is later. While there is no official model notice available yet, employers can likely create a notice in good faith.
If an employee has previously agreed to receive the form electronically (and hasn’t revoked consent), the 1095 form can be sent electronically. While guidance on this is still pending, a good-faith approach, like including consent for electronic delivery on the request form, should be sufficient.
Plan Sponsors now have 90 days, rather than 30, to respond to a proposed penalty letter from the IRS. This change gives employers more time to investigate and address the issue before responding.
Penalties can now be assessed within a six-year window, starting from the later of the 1095 Forms' due date or the actual filing date.
The 1095-B or 1095-C must still be submitted to the IRS along with the corresponding Form 1094. These changes only affect the distribution requirements to employees and individuals covered under group health plans.
The Paperwork Burden Reduction Act applies to all calendar years after 2023, while the Employer Reporting Improvement Act applies to returns due after December 31, 2024. Most employers will not need to distribute Forms 1095-B and 1095-C to employees for the 2024 year, with returns due January 31, 2025.
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