GBS Health & Benefits Compliance
Two Affordable Care Act (ACA) 1094/1095 Changes That Impact ACA 1094/1095 Reporting
On December 17, 2024 Congress passed two laws that would make changes to Affordable Care Act (ACA) 1094/1095 reporting rules. Biden signed both bills into law before the end of the year. So, these new laws are effective starting with the upcoming 2024 ACA 1094/1095 forms that are due in February/March 2025. Here is a quick summary of the two laws and the impact on ACA reporting.
Paperwork Burden Reduction Act
As background, under the ACA 1094/1095 reporting rules, there are filing and furnishing obligations. Filing refers to submitting the forms to the IRS. Furnishing refers to providing copies to applicable employees.
There is now an alternative method to furnish 1095-C (and B) forms to employees.
Instead of providing forms to all applicable employees, employers have the option to furnish the 1095 form only to employees who request the form.
If an employer wishes to use this alternative furnishing method, it must provide advance clear and accessible notice the that the 1095 form is no longer automatically provided as in past but is still available if requested.
- That communication should clearly explain how to request the form and expected timing.
- Employers would be wise to maintain a system for tracking requests and date the request was fulfilled.
When an employee requests the form, the employer must provide it by no later than the regular furnishing deadline or within 30 days of the request.
This change does not impact the employer requirement to populate and electronically file the 1094/1095 forms with the Internal Revenue Service. This change only impacts furnishing the forms employees.
Note: also this alternative method applies only to federal ACA 1094/1095 reporting. Employers that have employees in the handful of states that require state reporting must still comply with those state rules. Those states include California, Massachusetts, New Jersey, Rhode Island, Vermont, and the District of Columbia. Please refer to our summary “State-Specific Individual Mandate Rules and Annual Information Reporting Requirements” on the GBS Learning Center.
Employer Reporting Improvement Act
This Act provides a variety of improvements or clarifications.
There is now a 6-year Statute of Limitations on the collection of the ACA Employer Mandate penalties.
This means the IRS would not collect any penalties retroactively beyond 6 years after the due date for an annual filing.
The IRS is currently working on penalties for the 2022 calendar year and this is within the statute of limitations.
Employers will now have 90 days (compared to 30 days) to respond to a 226J proposed penalty letter they receive based on alleged noncompliance with the ACA Employer Mandate.
If employers that sponsor a self/level funded plan do not have a TIN/SSN for dependents, they may instead use full name and date of birth on the forms.
Employers are no longer required to get consent each year from employees to provide the 1095 form electronically instead of a hard copy paper form.
Under the new rule, initially, employers must obtain consent once but does not need to repeat each year.
However, if an employee revokes consent, an employer must provide paper forms unless/until the employees provides consent again to receive electronically.
Employers should clearly communicate the change and provide instructions on how to consent and how to revoke consent.
It would be wise to maintain a system for tracking consents and handling revocations.
January 2025
This document is not intended to be exhaustive, nor should any information be construed as tax or legal advice. Readers should contact a tax professional or attorney if legal advice is needed. Although we have made every effort to provide complete, up-to-date, and accurate information in this document, such information is meant to be used for reference only. If there is any inconsistency between the information contained in this document and any applicable law, then such law will control.
