The Employer Reporting Improvement Act and the Paperwork Burden Reduction Act (PBA), each signed into law in December 2024, provide the following penalty and reporting relief for plan sponsors required to provide minimum essential coverage in accordance with the requirements of the Patient Protection and Affordable Care Act (ACA):
- An individual’s date of birth may be used as a substitute when the individual does not have a tax identification number (TIN) for ACA reporting due in 2025 and after.
Reminder: Until further guidance is issued, to ensure that the reasonable cause exception from ACA reporting penalties is retained, plan sponsors should continue to solicit the individual’s TIN three times: (i) as part of the application for enrollment in the plan, (ii) within 75 days after the application is received and (iii) by December 31 of the year after the initial solicitation.
- The deadline to respond to IRS proposed Employer Shared Responsibility Payment (ESRP) letters (226-J Letters) has been extended from 30 days to 90 days, allowing plan sponsors more time to provide the necessary information. This relief applies to ACA penalty assessments proposed in taxable years beginning in 2025 and after.
- A six-year statute of limitations on ACA penalty assessments now applies to ACA reporting due after December 31, 2024.
- Under existing IRS guidance, certain reporting entities could choose to provide Forms 1095-B and 1095-C (the Forms) solely upon request to covered individuals other than full-time employees, provided notice posting requirements were met and, when requested, the Forms were timely provided. The PBA codifies this relief and extends it to applicable large employers with respect to full-time employees for Forms due in 2025 and after.The relief applies only if full-time employees and covered individuals have been given clear, conspicuous and accessible notice regarding their right to request the Forms, and when a request is made, the Forms are provided by the later of January 31 or 30 days after the request was made. The Act states that the time and manner of providing the notice will be determined by guidance to be issued by the IRS. At this time, it isn’t clear whether the existing guidance pertaining to covered individuals other than full-time employees will apply.
Reminder: While the Forms are not required to be automatically sent to covered individuals if the requirements noted above are met, plan sponsors are still required to file both Forms with the IRS. Additionally, any applicable state law is unaffected by these changes.
- The Forms may be furnished electronically if the individual consents. Now, the individual is deemed to have consented to receive the Forms electronically if the individual has ever given affirmative consent that has not been revoked.
If you have any questions, please reach out to your Faegre Drinker benefits counsel.
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