On December 23, 2024, President Biden signed two laws intended to simplify employer’s Affordable Care Act (ACA) reporting requirements. The Paperwork Burden Reduction Act (HR 3797) and the Employer Reporting Improvement Act (HR 3801) allow flexibility for employers to furnish 1095-B and 1095-C tax forms to employees upon request with proper notice (instead of automatically furnishing to all individuals). In response to an individual’s request, the form can be furnished electronically with proper consent. This blog focuses on employer flexibility for furnishing the forms to individuals. Reporting to the Internal Revenue Service (IRS) remains unchanged.

Background

As a refresher on ACA provisions, applicable large employers (ALEs) subject to the employer shared responsibility provisions are required to report on covered individuals under Internal Revenue Code (IRC) section 6056.

C-Forms: Each ALE satisfies the requirement to file a section 6056 return with the IRS by filing a Form 1094-C (transmittal) and, for each full-time employee, a Form 1095-C (employee statement). Self-funded ALEs use Form 1095-C.

B-Forms: Health coverage providers are required to report under IRC section 6055 for purposes of IRS to administer ACA’s individual shared responsibility provision. Section 6055 requires reporting by any entity that provides minimum essential coverage to an individual (i.e., health insurance company for insured coverage, small non-ALE self-insured group health plan sponsor) to the IRS with Form 1094-B (IRS transmittal) and 1095-B (statement to individual).

What’s new?

As of this writing, IRS hasn’t issued guidance interpreting the Paperwork Burden Reduction Act or the Employer Reporting Improvement Act. The following Q&As highlight the text of the laws with an emphasis on ALEs that sponsor a self-insured group health plan as we wait for IRS guidance.

Are self-funded plans included in employer reporting simplification?

Yes. Self-funded health plans are considered health coverage providers. Self-funded ALEs use Form 1095-C. Read IRS FAQs about 1094/95-C forms for more information.

The plan wants to avoid automatically mailing all employees their forms. What notice to employees is required? By when?

The IRS regulations previously allowed for some 1095 forms to be furnished only upon request. IRS allowed an “alternative manner of furnishing” a form for the following:

• Health insurance companies furnishing 1095-B to individuals
• Self-insured ALEs furnishing 1095-C to non-full-time employees and nonemployees who are enrolled in the plan.

The Paperwork Burden Reduction Act provides statutory authority for this flexibility to 1095-B and extends this flexibility to 1095-C forms that ALEs furnish to full-time employees.

Employers must give individuals timely, clear, conspicuous and accessible notice that the form will be provided upon request. The Paperwork Buden Reduction Act states that the IRS could set requirements regarding the notice (i.e., timing and manner).

According to an EY Tax News Alert, “It is anticipated that the alternative manner of furnishing the Form 1095-C statements will mirror those of the 1095-B.” The timing condition under the 1095-B regulation is that the “employer must post the notice on its website by January 31, 2025, and retain the notice in the same location on its website through October 15, 2025,” according to the alert.

The plan will automatically mail forms to everyone. When is the deadline to furnish by mail?

March 3, 2025, with the automatic extension

The plan posted a notice on its website and an employee requested their form. When is the deadline to furnish the form?

By January 31, 2025, or within 30 days of the request, whichever is later

When are forms and transmittals due to IRS?

March 31, 2025, if filing electronically (February 28, 2025, if filing by paper)

What are the requirements for electronic delivery to employees?

The Employer Reporting Improvement Act allows providers and employers to send 1095-B and 1095-C tax forms to individuals electronically upon obtaining consent from the individual to do so. Individuals may revoke consent at any time.

How long is electronic delivery consent valid?

Consent is valid until it is revoked.

Are state reporting requirements addressed?

No, the laws are only for federal-level reporting with Forms 1094/1095.

Conclusion

Going forward, these laws allow flexibility for employers to furnish 1095-B and 1095-C tax forms to individuals upon request and electronically if certain criteria are met. Employers that want to implement the simplifications could consider reviewing their notification capabilities and electronic consent procedures. Employers should check with their service providers on all compliance issues.

Developed by International Foundation Information Center staff. This does not constitute legal advice. Please consult your plan professionals for legal advice.