New Laws Transform ACA Compliance for Employers and Health Insurers in 2025

As of 2024, new laws simplify ACA reporting by allowing electronic distribution of forms upon request, easing the burden on employers and enhancing compliance.
As we approach 2025, the focus of employers and HR professionals has sharpened on meeting the requirements of the Affordable Care Act (ACA) related to reporting and disclosure.

Traditionally a daunting task, the preparation and mailing of Forms 1095-B and 1095-C to every full-time employee proved to be both tedious and time-consuming. However, a significant development occurred on December 23, 2024, when President Biden signed two crucial bills aimed at reducing the reporting burdens faced by employers and health insurance providers.

These legislative efforts are intended to streamline compliance, allowing organizations to navigate the evolving landscape of healthcare reporting with greater ease. What’s New? Starting from the 2024 ACA reporting year, employers and health insurers will be required to send out Forms 1095-B and 1095-C only to employees who explicitly request them.

Additionally, the delivery of these forms can now take place electronically, provided that employees consent to this method. Moreover, employers have received an important extension: they now have ninety days to respond to IRS 226-J letters, a considerable improvement over the previous thirty-day limit. The Paperwork Burden Reduction Act The Paperwork Burden Reduction Act (H.R. 3797) redefines the ACA landscape by eliminating the requirement for automatic issuance of tax forms to those enrolled in health plans.

Previously, it was mandatory to distribute Forms 1095-B and 1095-C to verify minimum essential coverage. Under the new guidelines, these forms need to be provided only when a covered employee or individual makes a specific request.

Upon receipt of such a request, the relevant form must be delivered by January 31 of the following year or within thirty days of the request—whichever is later.

Additionally, employers and insurers are now tasked with informing individuals about their right to request these forms, promoting transparency and compliance.

This significant shift will be effective for reporting periods commencing after the 2023 calendar year. The Employer Reporting Improvement Act Complementing the Paperwork Burden Reduction Act, the Employer Reporting Improvement Act (H.R. 3801) extends the ability to distribute Forms 1095-B and 1095-C electronically, contingent on employee consent.

Any prior consent on record for electronic delivery meets the new requirement, although employees always have the choice to withdraw their agreement in writing. The new legislation also permits the IRS to use an individual’s birth date as an acceptable alternative to a tax identification number (TIN) when a TIN is unavailable.

In yet another positive change, employers are now given at least ninety days to respond to IRS 226-J letters, extending the earlier deadline considerably.

Furthermore, a six-year statute of limitations for collecting employer shared responsibility payments (ESRPs) derived from 226-J letters is introduced, augmenting predictability for employers. With 2025 on the horizon, the alterations brought forth by the Paperwork Burden Reduction Act and the Employer Reporting Improvement Act significantly simplify ACA compliance.

By granting the ability to electronically distribute Forms 1095-B and 1095-C solely upon employee request, administrative burdens are set to decrease, ultimately enhancing operational efficiency. In addition, the extended timeline to address 226-J letters, paired with the established six-year period for ESRP collections, provides much-needed certainty for employers.

These modifications represent a progressive shift toward a more user-friendly and manageable framework for healthcare reporting, empowering organizations to fulfill their compliance obligations with greater ease.

Source: Natlawreview.com