Changes Coming for Employer ACA Reporting

Simplify ACA Reporting with Our Affordable and Accurate Solution

Last week, the U.S. Senate passed two bills aimed at simplifying reporting obligations under the Affordable Care Act (ACA), potentially reducing administrative burdens for employers. Both bills are expected to be signed into law by President Biden. One they become law they will apply to the upcoming 2024 ACA filings. In summary, the laws allow employers to

• Provide Form 1095-C upon an employee’s request instead of mailing the form to all employees;
• Use an employee’s birthdate instead of Social Security Number on form 1095-C;
• Send the forms electronically instead of by U.S. Mail; and
• Take 90 days to respond to an IRS penalty letter.

The Paperwork Burden Reduction Act (H.R. 3797)

The Paperwork Burden Reduction Act focuses on reducing the need for employers and health insurers to send out unnecessary tax forms, including 1095-B and 1095-C.

Key Changes:

1. On-Request Reporting: Employers and health insurance providers will no longer be required to send tax forms to covered individuals unless those individuals request them. This flexibility currently exists for 1095-B forms and will now extend to 1095-C forms under the bill.
2. Timely Fulfillment of Requests: Employers and providers must fulfill requests for tax forms by January 31 or 30 days after the request date, whichever is later.
3. Notification Requirement: Employers and health insurance providers must inform individuals about their ability to request these tax forms, adhering to IRS-established guidelines.

Employers may continue to mail the forms but may instead establish an on-request policy. By shifting to an on-request system, this bill seeks to eliminate unnecessary paperwork while ensuring individuals can access forms if needed.

The Employer Reporting Improvement Act (H.R. 3801)

The Employer Reporting Improvement Act brings several modifications to the ACA’s reporting requirements, specifically for tax forms 1095-B and 1095-C.

Key Changes:

1. Statutory Authority for Flexibility: Employers and health insurance providers have been permitted to substitute an individual’s date of birth for their Tax Identification Number (TIN) when the TIN is unavailable. Additionally, they can provide tax forms to individuals electronically. This bill codifies these practices into law, offering greater certainty and ease for reporting.
2. Extended Response Time for Large Employers: Under current law, the IRS generally provides 30 days for large employers (those with 50 or more full-time employees) to respond to letters about proposed assessments for failing to offer affordable, minimum essential coverage. The bill requires the IRS to extend this response period to at least 90 days.
3. Six-Year Statute of Limitations: The bill establishes a six-year timeframe for the IRS to collect assessments related to ACA employer mandates.

These changes aim to streamline the reporting process while giving employers additional time to address compliance issues.

Implications for Employers

Both bills, if signed into law, give employers the ability to simplify their ACA compliance. The Employer Reporting Improvement Act provides statutory backing for existing flexibilities, offers employers more time to respond to IRS assessments, and sets clearer limits on liability. The Paperwork Burden Reduction Act will significantly decrease the volume of forms employers and health insurance providers must send out, saving time and resources.

It is important to note that the 1095 forms are still required and employers must produce the forms; the legislation, if it becomes law, simply modifies the 1095 Form distribution requirements.

BAS will stay on top of the legislation and will be able to address changes, as needed.