Two recently passed laws – the Employer Reporting Improvement Act and the Paperwork Burden Reduction Act – are set to bring significant changes to the Affordable Care Act (ACA) reporting and enforcement processes. As their names suggest, these new laws are meant to ease the reporting requirements for employers and health plan sponsors.
The ACA generally requires that Applicable Large Employers (ALEs) report on the health coverage they offer to their full-time employees via Forms 1095-B and 1095-C, which must be filed with the IRS and provided to all full-time employees and those receiving employer-sponsored coverage. Under the new Paperwork Burden Reduction Act, employers and health insurers no longer need to automatically send Forms 1095-B or 1095-C to every full-time employee or covered individual. Instead, these forms must be provided only if request by the employee or individual. If requested, the form must be sent by January 31 or within 30 days of the request, whichever is later. Because of this change, employers must notify employees of their right to request these forms, and although specific requirements for this notice are still forthcoming, a good faith interpretation should suffice for now.
These news laws also introduce important changes to ACA Employer Shared Responsibility Payments (ESRP). They laws extend the response time to an IRS Letter 226-J (the initial letter to notify an ALE that they may be liable for an ESRP) from 30 days to 90 days. This extension will allow employers more time to review the letter, gather necessary information, and help to mitigate potential penalties. Additionally, they establish a six-year statute of limitations for the IRS to assess ESRPs. This period begins on the due date of the applicable 1095 forms or the date the return was filed, whichever is later. Previously, the IRS had no set statute of limitations for these assessments, so the implementation of this new six-year window provides clarity and predictability for employers.
Lastly, the new laws introduce flexibility around Tax Identification Number (TIN) reporting, allowing an employer to use a full name and date of birth as substitutes where a TIN is unavailable, and codify the existing regulations around electronic delivery of the 1095 forms to consenting employees.
Overall, these are likely welcome changes to the processes and procedures around employer reporting under the ACA. Employers will still need to comply with the overall ACA mandates regarding minimum essential coverage and employer shared responsibility payments, even as the new laws simplify and streamline those reporting requirements. Updates should be monitored closely to ensure ongoing compliance, and – as always – we are here to help!
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