New Changes to ACA Reporting Requirements Offer Welcome Relief to Employers and Others

Four changes have been made to the employer reporting requirements under the Affordable Care Act (ACA) for 2025.[1] These changes aim to simplify the reporting processes for employers.

• Form 1095 Distribution – Effective for the 2024 reporting year, employers are no longer required to distribute Form 1095-C to all full-time employees (and plan sponsors of self-insured plans do not have to distribute Form 1095-B to individuals[2]). Instead, these forms only need to be provided upon request. In order to avail yourself of this new rule, you must:
   
  • Post a notice of availability that is “clear, conspicuous and accessible notice (at such time and in such manner as the Secretary may provide).” While the IRS has been instructed to issue guidance as to how and when the notice must be distributed, no such guidance has been issued as of the date of this alert. 
     
  • Upon receipt of an employee request, distribute the form within 30 days or, if later, by January 31. Electronic distribution is permitted if the employee consents (which is valid until withdrawn in writing).

Employers must still prepare and file Forms 1095-C and 1095-B with the IRS each
year (generally due to be filed with the Form 1094-C/1094-B transmittal form by
March 31).

• Reporting for Self-Insured Plans – Effective for the 2024 reporting year, employers and plan sponsors issuing Form 1095-C for self-insured plan coverage of spouses and dependents can use the individual’s full name and date of birth if their social security number (SSN) or other taxpayer identification number (TIN) cannot be obtained. This change eases the burden on employers who have experienced problems obtaining the necessary TIN from nonresident aliens with no SSN or TIN. The new rule avoids the need for employers to establish reasonable cause before they are able to use a date of birth.
   
• Longer Response Time for ACA Penalty Letters – Employers who receive a Letter 226J from the IRS proposing assessment of employer shared responsibility payments under Section 4980H of the Internal Revenue Code (“ACA Penalties”) will now have 90 days to respond. This is an increase from the prior 30-day window, which often left employers without sufficient time to review and address issues. This new time limit applies to assessment proposed in taxable years beginning after December 23, 2024 (for calendar year plans, this would be 2025).
   
• 6-Year Statute of Limitations for ACA Penalties – A new 6-year statute of limitations will apply to the IRS’ assessment of ACA Penalties. This new time limit runs from the due date for the return (or the return filing date, if later) and applies to returns due after December 31, 2024. Previously, the IRS took the position there was no statute of limitations. 

It is important to note that these changes only impact employers’ reporting requirements under federal law. Several states have their own reporting requirements (e.g., CA, MA, NJ, RI, D.C.), so employers will need to continue to comply with those state laws, where applicable.

Action Steps

In light of these changes, employers and plan sponsors with ACA reporting responsibilities should consider taking the following steps:

1. Update Processes and Post Notice. If you want to take advantage of the new exemption from distributing Forms 1095-C (or Forms 1095-B, where applicable):

• Draft and post your notice of availability of Form 1095-C (or Forms 1095-B, where applicable). If you wish to post a notice before the IRS guidance is issued, you should consider following prior IRS guidance that was issued to address similar notice provisions that apply to Form 1095-Cs issued by reporting entities to covered nonemployees and non-full-time employees. Under this prior guidance, the notice must be posted prominently in a location on the reporting entity’s website that is reasonably accessible to all individuals who would be entitled to receive the form and must be retained in that same location through October 15 following the calendar year for which the statement was issued (or, if October 15 is a Saturday, Sunday or legal holiday, the next business day). The notice must state that the individual may obtain a copy upon request, include an email address and physical address to which the request may be submitted, and provide a telephone number for any questions. Even if you follow this prior guidance, however, you should still stay alert for IRS guidance that specifically applies to the current rule and act quickly to make any changes to your notice or its posting to the extent necessary to achieve full compliance.
   
• Check with any vendors that you use to prepare your ACA reporting and update any existing processes as necessary, including the need to annually post the notice and keep it posted for the required time period.
   
• Establish a process for timely responding to requests to obtain a copy of the form and, if you want to be able to provide the form electronically, draft a valid consent form.

2. Continue to Prepare and File Forms 1095-C and 1095-B with the IRS. Remember that you still have an obligation to file these statements with the IRS, with the required transmittal form (generally due by March 31).

3. Obtain Full Names and Dates of Birth. If you sponsor a self-insured plan and anticipate that you may have covered individuals who do not have a SNN or TIN, adopt procedures to obtain full names and dates of birth.