EFFECTIVE IMMEDIATELY!
Employers No Longer Need to Automatically Distribute ACA Reporting 1095 to Employees
Summary of Key Changes to ACA Reporting Requirements
On December 23, 2024, the Employer Reporting Improvement Act and the Paperwork Burden Reduction Act were signed into law, significantly altering the requirements for distributing IRS Forms 1095-B and 1095-C to employees and covered individuals.
ACA Reporting
As a reminder, the Affordable Care Act (ACA) required that Applicable Large Employers (ALEs) and health insurers report health coverage information to employees and covered individuals using Forms 1095-B or 1095-C. These forms were filed with the IRS alongside Forms 1094-B or 1094-C to determine if employers owed Employer Shared Responsibility Payments (“penalties”).
Key Changes Introduced by the Acts
1. Distribution of Forms 1095-B and 1095-C
• Employers and insurers are no longer required to provide these forms to all eligible employees and/or covered individuals.
• A form must be provided only upon request, and it must be delivered by the later of:
• January 31 of the year following the coverage year, or
• 30 days after the request date.
• Employers must notify employees of their right to request these forms. However, a model notice hasn’t been created yet. Employers are expected to make a good-faith effort in drafting this communication. Contact your Relationship Manager if you would like assistance with this communication.
• If employees have consented (or haven’t actively requested to NOT receive electronically), the communications and forms can be delivered electronically. Contact your Relationship Manager for more information on Electronic Safe Harbor communications.
2. Extended Response Time for IRS Penalty Letters and Statute of Limitations for Penalties
• Employers previously had a 30-day window to respond to IRS letters, often leading to rushed investigations and responses. Additionally, there was no statute of limitations for assessing penalties, leaving employers exposed to potential liabilities indefinitely.
• Employers now have 90 days, instead of 30, to respond to IRS Letter 226J before any further action is taken. This extension provides employers more time to investigate and address errors or missing information that often result in proposed penalties.
• A six-year limit now applies to the IRS’s ability to assess penalties, starting from the later of:
• The due date of the 1095 Forms, or
• The actual filing date.
Effective Dates
• The Paperwork Burden Reduction Act applies to calendar years after 2023.
• The Employer Reporting Improvement Act applies to returns due after December 31, 2024.
• For most employers, the distribution requirements for Forms 1095-B and 1095-C will no longer apply for returns due January 31, 2025, covering the 2024 calendar year.
ACA Reporting is Still Required!
• Employers must still prepare and file Forms 1095-B and 1095-C with the IRS, along with the associated Form 1094.
• These Acts only modify the distribution requirements for employees and covered individuals in group health plans.
There may be further guidance coming, including model notice(s), so please keep an eye out for more information. As always, if you have any questions, please reach out to your Rose Street Advisors’ Relationship Manager.
Ben Cohen
CEBS | Employee Benefits Relationship Manager
Ben Cohen, CEBS, is one of our large group Employee Benefits Relationship Managers. Following graduation from Central Michigan University (Fire Up Chips!) with a degree in Human Resources, Ben spent 18 years as a benefits consultant with Kushner & Company before joining RSA in 2014. Ben’s daily focus is working with clients to offer benefit options that help recruit and retain a productive workforce in a compliant and cost-effective manner designed specifically for each employer. He also enjoys educating employees about their benefits in a fun and informative manner.
Outside of work, Ben is passionate about community involvement and volunteering. Ben also loves spending time at home and at their cottage in South Haven with his wife, Jen, and their dogs. He loves travel, cars, reading on the front porch, golf, and sailing (on friends’ boats!).
Interested in more?
Securities and Investment Advisory Services Offered Through M Holdings Securities, Inc. A Registered Broker/Dealer and Investment Advisor, Member FINRA/SIPC. Rose Street Advisors is independently owned and operated.
Please go to www.mfin.com/DisclosureStatement for further details regarding this relationship.
Check the background of this Firm and/or investment professional on FINRA’s BrokerCheck.
For important information related to M Securities, refer to the M Securities’ Client Relationship Summary (Form CRS) by navigating to mfin.com/m-securities
Registered Representatives are registered to conduct securities business and licensed to conduct insurance business in limited states. Response to, or contact with, residents of other states will only be made upon compliance with applicable licensing and registration requirements. The information in this website is for U.S. residents only and does not constitute an offer to sell, or a solicitation of an offer to purchase brokerage services to persons outside of the United States.
This site is for information purposes and should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney, financial or tax advisor or plan provider. CA Insurance License. File #5757992.1