The Affordable Care Act Reporting Landscape: Recent Legislative Changes

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 Recent legislative changes have brought significant relief to employers grappling with the complexities of Affordable Care Act (ACA) reporting. The Employer Reporting Improvement Act (Act) and the Paperwork Burden Reduction Act, once signed into law by President Biden, will introduce several key modifications to the ACA’s reporting and enforcement rules. 

Background: Current ACA Reporting Requirements 

Under the current ACA regulations, plan sponsors, particularly ALEs, must report information about the health coverage they offer to employees using Forms 1095-B and 1095-C. These forms must be filed with the IRS and furnished to all full-time employees and employees receiving employer-sponsored coverage.    

Current ACA enforcement includes a tight 30-day turnaround to respond to IRS proposed Employer Shared Responsibility Payments (ESRP) assessments. These assessments are sent via US mail, often taking time to reach employer contacts. This delay increases the risk of late replies, which may result in additional penalties. Additionally, there has been an absence of a statute of limitations for assessing and collecting ESRPs. 

Key Changes Introduced by the Act 

  • Reduced Distribution Requirements. Employers will no longer be obligated to send Forms 1095-B and 1095-C to all full-time employees and covered individuals. Instead, these forms will only need to be provided upon specific request. Employers will have until January 31st or 30 days after the request, whichever is later, to fulfill these requests. 

  • Notice Requirement. To avail themselves of this streamlined approach, employers must provide advance notice to employees, informing them of their right to request these forms. It is expected that the IRS will provide further guidance on the requirements for this notice. In the interim, a good-faith interpretation will likely suffice when drafting the notices. 
  • Extended Response Period for Proposed ESRPs. Employers will now have at least 90 days to respond to proposed employer-shared responsibility payment (ESRP) assessments from the IRS. This extension provides valuable additional time to gather necessary information and formulate a comprehensive response. 
  • Statute of Limitations on Penalty Assessments. A six-year statute of limitations will be imposed on the assessment and collection of ESRPs. This cap on potential liability offers greater predictability and allows employers to better manage their compliance efforts. 

Next Steps for Employers 

While the final regulations for these changes are still pending, employers should take the following steps to prepare: 

  1. Review Current ACA Reporting Procedures.  Assess your organization’s current ACA reporting processes to identify areas where improvements can be made. 
  2. Develop a Plan for Notifying Employees.  Draft a clear and concise notice informing employees of their right to request Forms 1095-B and 1095-C. 
  3. Stay Updated on Regulatory Developments. Monitor IRS guidance and other regulatory updates to ensure compliance with the new rules. 
  4. Consult with Benefits Advisors, Legal Counsel and/or Tax Advisors. Seek expert advice to navigate the complexities of ACA reporting and potential penalties. 

By taking these proactive steps, employers can ensure a smooth transition to the updated ACA reporting and enforcement landscape and minimize potential compliance risks. 


Source(s): HRWorks, received on January 14, 2025.