Alerts

Two laws passed last year and signed by President Biden are set to ease specific Affordable Care Act (ACA) reporting requirements for employers this year. 

One Less Obligation, Maybe 

Congress passed, and President Biden recently signed the Paperwork Burden Reduction Act (the “PBRA”).   One reporting obligation of the ACA had been to furnish forms to all group health plan participants stating that they had minimum essential coverage under the group plan so that they could comply with the individual coverage mandate under the ACA. In addition, there was a second obligation to report the same information to the IRS. The individual coverage mandate was eliminated during the first Trump administration, but the reporting obligation remained. That automatic furnishing requirement was eliminated by the PBRA starting for calendar years after 2023, i.e., for 2024 and forward. Normally, those forms would be required to be supplied by January 31 of the year following the year of coverage. Under the PBRA, employers will only be required to provide that notice to those covered persons who specifically request the information.  The notice will be required to be provided no later than the later of (1) January 31 of the year following the calendar year for which the coverage was provided or (2) 30 days after the request.

This seems like very good news for all employers. While this may reduce paperwork for many employers, certain states, California, Massachusetts, New Jersey, Rhode Island, Vermont (although Vermont has no penalty for not having coverage), and the District of Columbia still have individual mandates. Employees in these jurisdictions may request the forms for their own compliance. Accordingly, employers should be prepared to provide the forms on request. Some employers may find it more practical to continue sending the forms to all employees rather than manage requests individually.

Reporting Confusion Eased 

A second bill, the Employer Reporting Improvement Act (the “ERIA”) provides an option for employers who are unable to determine an individual’s taxpayer identification number (“TIN”) to be able to substitute the individual’s date of birth. This codifies similar regulatory guidance. The ERIA also permits employers and insurance providers to offer 1095-B and 1095-C tax forms to individuals electronically, easing paper burdens and administrative costs

In addition, employers who receive “226-J” letters (the letters are sent to assess penalties under the ACA if a full-time employee of the employer has sought coverage on a healthcare exchange and the employer had not offered the individual ACA-qualifying coverage) from the IRS will have 90 days to respond to the letters if they feel that they were issued in error instead of the previous 30-day time limit.

While the IRS was often flexible in granting response extensions, formalizing the 90-day period offers employers more predictable relief. ERIA also establishes a six-year statute of limitations for collecting ACA-related payments, clarifying the timeline for any liability. 

Conclusion

Employers have one less burden this year: they are no longer required to automatically furnish proof of coverage forms to all covered individuals. However, they must be prepared to (1) notify individuals that these forms are available upon request and (2) provide the forms to those who ask.

Meanwhile, the ERIA offers welcome clarifications—allowing an alternative to TINs, enabling electronic distribution of forms, and extending the response window for IRS notices. Taken together, these changes should reduce stress and compliance burdens for most employers.

This Legal Update is not intended to be exhaustive, nor should any discussion or opinion be construed as legal advice. Readers should contact legal counsel for legal advice. All rights reserved.