New Laws Aim To Streamline ACA Reporting and Reduce Paperwork Burdens for Employers
Overview
Two newly enacted laws, the Employer Reporting Improvement Act (“H.R. 3801”) and the Paperwork Burden Reduction Act (“H.R. 3797”), aim to simplify ACA-related healthcare information reporting obligations for employers and to reduce administrative burdens arising in the context of ACA information reporting and the resolution of penalty assessments arising under the ACA’s Employer Shared Responsibility Provisions (“ESRPs”). H.R. 3801 introduces flexibility in reporting Taxpayer Identification Numbers (“TINs”), allows electronic statement consents, and extends response timelines for penalty assessments. Meanwhile, H.R. 3797 permits an alternative method for furnishing health coverage statements, easing compliance assuredness efforts by employers. Both provisions were enacted into law on December 24, 2024.
Action Items
- Update Internal Processes: Teams should inform clients to review ACA reporting workflows to implement TIN substitution (name and DOB) where necessary.
- Enhance Systems for Electronic Consent: Confirm with clients their processes for obtaining and managing employee consent for electronic delivery of Forms 1095-B/1095-C (or ACA statements).
- Communicate Changes via a Plan: Ensure clients execute an effective communication plan that notifies employees about their rights to request ACA statements and the availability of electronic options.
- Operational Response and Readiness: Encourage the development of internal solutions to prepare for the 90-day window to respond to proposed ACA penalty assessments.
- Review Notice Requirements: Review client notifications to ensure clarity and conspicuous placement of the notice and provide employees with guidance respecting satisfaction of any requests for ACA-related statements by covered individuals.
Summary
Employer Reporting Improvement Act (H.R. 3801)
H.R. 3801 addresses challenges employers face in reporting ACA-related health coverage. Key provisions include:
- TIN Reporting Flexibility: Employers unable to obtain TINs can now use an individual’s full name and date of birth.
- Acceptance for Electronic Delivery of Statements: Employees are deemed to have consented to electronic delivery of ACA statements if consent was previously given (unless revoked in writing).
- Extended Response Times: Employers now have a minimum 90-day response period for IRS Letter 226J proposed ACA penalty assessments.
- Extended Statute of Limitations: For certain filings, the statute of limitations for the assessment of ACA related civil monetary penalties is extended to a total six (6) years from the earlier of the date the filing was due or received.
Paperwork Burden Reduction Act (H.R. 3797)
H.R. 3797 simplifies ACA reporting by allowing employers to furnish health insurance coverage statements upon request, rather than on a required and automatic basis. Employers must provide:
- Clear Notices: Informing employees they may request a statement(s).
- Timely Delivery: Statements must be furnished by January 31 of the following year or 30 days after a request is made.
Considering H.R. 3801 and H.R. 3797 enjoyed both congressional and Presidential support, the bills were signed by President Biden and enacted into law on December 24, 2024. The provisions of both laws were made effective respecting statements delivered and submitted for calendar years occurring after 2023.
While we are still awaiting advisory rulemaking from the IRS regarding specifics of required notices and other operational elements of these two new laws, these welcomed legislative updates streamline compliance for plan sponsors, employers, and other insurance issuers, all the while reducing administrative burdens and aiding in transparency efforts for employees.
That said, employers should begin updating reporting systems, ensuring compliance with the new notice requirements, and should prepare to manage statement requests on a timely and efficient basis.
Additional Information & Related Resources
For questions regarding this Client Alert or any other related compliance issues, please contact your Baldwin service team.
Thank you for your time.
Kindest regards,
The Baldwin Group
For more information
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