New Requirements for ACA Forms 1095-B and 1095-C

Introduction 

The Affordable Care Act (ACA) requires employers to report health coverage details for employees. This is done through Forms 1095-B and 1095-C. Recently signed bills, the Paperwork Reduction Act and the Employer Reporting Act, have changed reporting rules and enforcement practices. These changes aim to reduce the burden on employers while improving compliance. Let’s explore what’s new and how employers can stay ahead. 

Refresher: What Are Forms 1095-B and 1095-C? 

Forms 1095-B and 1095-C track health coverage provided to employees. Employers classified as Applicable Large Employers (ALEs) and all employers that self-insure must furnish them. The IRS uses these forms to verify compliance with employer mandates. 

• Form 1095-B: Used to furnish information to taxpayers who are covered by minimum essential coverage and therefore are not liable for the individual shared responsibility payment. 

• Form 1095-C: Furnished to any employee of an ALE who is a full-time employee for one or more months of the calendar year. ALEs must report that information for all twelve months of the calendar year for each employee. 

What’s New in ACA Reporting? 

The new rules bring significant changes. Key updates include: 

Optional Form Distribution: Employers are no longer automatically required to send Forms 1095-B and 1095-C to all full-time employees and covered individuals. Forms must now be sent only upon request by the employee/covered individual, if employees are given proper notice. If requested, the applicable Form must be provided by January 31 or 30 days after the date of the request, whichever is later.  

Are you serious that employers don’t have to send these? 

Yes, but to take advantage of optional for distribution, plan sponsors must provide notice to employees, telling them about their right to ask for a Form.  Further guidance on the form and requirements for this notice may be forthcoming.  

What has not changed? 

Health insurance provider and employer reporting to the IRS has not changed.  Transmittal submissions to the IRS are still required.  Generally, Form 1094-C must be filed by March 31 if filing electronically (or February 28, if filing on paper).  

Notice Requirements for Employees 

To comply with the new rules, employers must notify employees about their right to request forms.  

• Notices can be sent electronically (with employee consent) or in paper form.  

• Employers should include clear instructions on how employees can make a request. 

• Employers should document their efforts to provide accurate notices. 

We are expecting more information from the agencies to be released sooner rather than later. 

Longer Employer Shared Responsibility Payment (ESRP) Response Deadlines 

Employers now have 90 days to respond to proposed ESRPs. This extension gives employers more time to review letters, gather data, and submit corrections. It also reduces the risk of penalties caused by rushed responses. 

Statute of Limitations on ESRPs 

The new six-year limit for ESRP assessments provides clarity. The period begins from the filing date or the filing deadline, whichever is later. Employers can now plan their compliance efforts with greater certainty. 

Employer Benefits from the New Rules 

The updates provide several advantages for employers: 

• Lower Administrative Burden: Optional form distribution saves time and resources. 

• More Time for ESRP Responses: Employers can avoid unnecessary penalties with extended response deadlines. 

• Clearer Compliance Deadlines: The six-year limit offers predictability for managing risks. 

Using Good Faith for Compliance 

Until further guidance is available, employers should act in good faith. This means making reasonable efforts to comply with notice and reporting requirements. Documenting these efforts can help if issues arise. 

State Regulations 

Please be aware that there are state regulations that require the mailing of notices.  Work closely with your employee benefits attorney to determine your best path forward for 2025.