On Monday, December 23, 2024, President Biden signed into law two bills—the “Paperwork Reduction Act” (H.R. 3797) and the “Employer Reporting Improvement Act” (H.R. 3801)—introducing changes that simplify ACA reporting for applicable large employers (ALEs) and other entities required to furnish forms 1095-B & 1095-C to individuals.
Streamlined Distribution of Form 1095-C
Employers subject to ACA reporting requirements no longer must automatically distribute Forms 1095-C to employees. Instead, employers only need to prepare the forms and distribute them upon an employee's affirmative request.
To take advantage of this reduced administrative burden, employers must provide employees with clear, conspicuous, and accessible notice of their ability to request these forms. The IRS will issue guidance on the required notice. Once an employee requests the form, employers must fulfill the request by the later of:
- 30 days from the date of the request, or
- January 31 of the year following the calendar year to which the return pertains.
Employers are still required to create Forms 1095-C, but this change allows them to forgo automatic distribution unless requested. This is effective for calendar year 2024 forms that are required to be furnished to employees in 2025.
It is important to note that these changes do not impact an ALE’s obligation to (1) offer affordable, minimum essential coverage meeting minimum value requirements to its full-time employees, or (2) file forms 1094-C and 1095-C with the IRS by the applicable filing deadline.
Extended Response Time for IRS Letters
Another key change extends the response window for IRS Employer Shared Responsibility Payment (ESRP) letters from 30 days to 90 days, giving employers more time to review and address any discrepancies.
New Statute of Limitations on Penalties
The legislation introduces a six-year statute of limitations for ACA penalties, providing a clear timeframe for potential enforcement actions.