Two newly enacted laws, the Employer Reporting Improvement Act (“H.R. 3801”) and the Paperwork Burden Reduction Act (“H.R. 3797”), are set to simplify ACA reporting requirements for employers and reduce the administrative hurdles associated with compliance. Signed into law on December 24, 2024, these measures bring practical updates that aim to streamline reporting processes, provide additional flexibility, and enhance transparency for employees. Employers should take steps now to align their operations with these changes, which affect ACA-related statements and penalty assessments for calendar years beginning after 2023.
Employer Action Items
- Update Internal Processes: Implement TIN substitution using an individual’s name and date of birth where necessary.
- Enhance Systems for Electronic Consent: Develop or improve processes for obtaining and managing employee consent for electronic ACA statement delivery.
- Review Notice Requirements: Ensure employee notices clearly communicate their rights to request ACA statements and provide guidance on accessing electronic options.
- Plan for Penalty Response Timelines: Prepare internal teams to manage the new 90-day response window for IRS Letter 226J assessments.
- Streamline Request Management: Develop systems to ensure timely delivery of ACA statements within 30 days of employee requests.
- Monitor & Comply with State-level Individual Mandate Requirements. Remember that several states impose individual mandate requirements in addition to the Federal government and there may still be individual reporting requirements due in connection with state-level requirements.
- Preparation of Statement is Still Required. While individual employee statement needed be automatically provided in written form to covered individuals and employees, individual statement must nevertheless be provided upon request from the covered individual or the employee.
Summary
Employer Reporting Improvement Act (H.R. 3801)
H.R. 3801 introduces several key changes to ACA reporting practices, making compliance more manageable for employers. The act allows employers to substitute an individual’s full name and date of birth for a Taxpayer Identification Number (TIN) if obtaining the TIN is not feasible. Furthermore, it simplifies the electronic delivery of ACA statements by deeming employees to have consented if they previously agreed to electronic communications unless revoked in writing. Employers also benefit from a new 90-day response window to address IRS Letter 226J penalty assessments and an extended six-year statute of limitations for certain filings related to ACA compliance.
Paperwork Burden Reduction Act (H.R. 3797)
H.R. 3797 further reduces administrative burdens by allowing employers to provide ACA health coverage statements only upon request rather than automatically. Employers must notify employees of their right to request these statements and, if requested,ensure they are furnished by January 31 of the following year or within 30 days of such request. This flexibility reduces unnecessary paperwork and streamlines communication with employees.
Conclusion
Together, these laws reflect bipartisan support for reducing the complexities of ACA compliance while maintaining essential transparency and accessibility for employees. The adjustments also alleviate administrative strain for employers and improve the user experience for employees seeking ACA-related information.
Employers are encouraged to act swiftly to implement these changes. This includes updating systems, training internal teams, and ensuring compliance with notice and delivery requirements. These proactive steps will help employers remain compliant while taking advantage of the efficiencies these laws bring.
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