Recent legislative changes have streamlined Affordable Care Act (ACA) reporting requirements, reducing administrative burdens for employers. The enactment of the Paperwork Burden Reduction Act (PBRA) and the Employer Reporting Improvement Act (ERIA) introduces key modifications effective for the 2024 tax year.

The Paperwork Burden Reduction Act

The PBRA amends the Internal Revenue Code and reduces unnecessary paperwork related to health insurance coverage reporting for employers and employees.

Previously, employers that provided minimum essential coverage were required to report this information to the IRS and provide each covered individual with a 1095-B or 1095-C tax form by Mar. 3 of each year. Effective for tax forms starting with the 2024 calendar year, the PBRA provides for the following changes:

• Employers are no longer required to send the 1095-B and 1095-C tax forms to individuals who are covered, unless a form is requested. However, employers must inform covered individuals of their right to request a form.
• If a 1095-C tax form is requested, it must be furnished to the individual by Mar. 3 or 30 days after the date of the request, whichever is later.

This means forms, which would otherwise be required to be sent out January 2025, will now only be required to be sent upon request.

The Employer Reporting Improvement Act

Employers must report required information using the covered individual’s Tax Identification Number (TIN). Additionally, if a large employer (i.e., one with 50 or more full-time employees) received a proposed assessment from the IRS (i.e., a Letter 226-J), the employer has only 30 days to respond.

ERIA provides the following changes to tax forms due after Dec. 31, 2024:

• Codifies the IRS’ current practice of allowing an individual’s date of birth to be substituted for the individual’s TIN, if the TIN is not available.
• Codifies the IRS’s current practice of allowing employers to offer the 1095-B and 1095-C tax forms to individuals electronically, if such individuals affirmatively consented to receive forms electronically at any prior time. However, an individual may revoke such prior consent in writing.
• Extends to 90 days the time for an employer to respond after receiving its first Letter 226-J regarding a notice of proposed assessment.
• Implements a six-year statute of limitations for collecting penalty assessments.

Impact to Employers

These bills provide relief to large employers and reduce their burden under the ACA’s reporting requirements. However, there are some important steps that should be taken to ensure this information is communicated to employees:

• Update Communication Protocols: Ensure all covered individuals are informed of their right to request Forms 1095-B and 1095-C. This notification can be included in annual benefits communications or posted on the company’s intranet.
• Revise Administrative Procedures: Implement systems to track and respond to individual requests for forms within the specified deadlines. This may involve training staff or updating internal processes to handle requests efficiently.
• Review Data Collection Practices: Confirm your records include either the TIN or date of birth for all covered individuals to comply with reporting requirements.

How We Can Help

We simplify ACA compliance by offering comprehensive tools to manage your pre-tax payroll health care coverage deductions, track average hours worked by employees and calculate your full-time equivalent employee headcount on a month-to-month basis. Our system also alerts you when employees become eligible for ACA benefits, ensuring timely action. Partnering with a payroll provider familiar with the ACA regulations gives you peace of mind that your organization will remain compliant with its evolving requirements. Connect with us today to learn more.