Originally published: January 3, 2025
Updated: January 28, 2025
Update: The IRS has issued Notice 2025-15, providing guidance on how employers must inform individuals of their right to request Form 1095-B/1095-C (in order to only provide the forms upon request, as described further below). Notice 2025-15 clarifies that the existing guidance available in Treas. Reg. Section 1.6055-1(g)(4)(ii)(B)(1)-(3) applies, requiring the following conditions:
- The notice of availability of Forms 1095-B/C must be posted by the due date for furnishing statements (i.e., generally March 2 annually, but falls to March 3, 2025 for calendar year 2024 reporting, as March 2 is a Sunday) and retained through October 15 of the year following the calendar year in which the Forms apply;
- The notice must:
- Be clear and conspicuousBe posted in a location on its website that is reasonably accessible for the individuals
- Include a statement that individuals may receive a copy of their statement (i.e., Form 1095-B/C) upon request, an email address and a physical address to which a request for their statement can be sent, and a telephone number that individuals can use to contact the employer with any questions
- Employers must provide Forms 1095-B/C to a requesting individual by January 31, or within 30 days of request, whichever is later.
Guidance also provides that the notice will satisfy requirements if it is written in plain, non-technical terms and with letters of a font size large enough (including any visual or graphics) to call to attention that the information pertains to a tax statement and reporting health coverage. For example, a notice is clear and conspicuous if the website provides a statement on the main page (or a link on the main page) reading “Tax Information” with a secondary page that includes a statement such as, “IMPORTANT HEALTH COVERAGE TAX DOCUMENTS”; explains how one can request their Form 1095-B/C; and includes the reporting entity’s (i.e., the employer’s) email address, mailing address, and telephone number.
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On December 23, 2024, President Biden signed two bills into law, the Paperwork Burden Reduction Act (H.R. 3797) and the Employer Reporting Improvement Act (H.R. 3801), that aim to simplify certain Affordable Care Act (ACA) requirements with changes effective for the 2024 calendar year reporting (i.e., effective for reporting due in early 2025).
Compliance Snapshot
- Employers and insurance carriers are no longer required to distribute Forms 1095-B/1095-C (“Forms”) to covered individuals for purposes of ACA compliance. Instead, such forms must be provided upon request (employers and carriers must inform individuals of their right to request a form) and the Forms can be provided electronically.
- An individual’s birthdate is permitted as a substitution for a Social Security Number (SSN), when the SSN is not available.
- Employers are now permitted at least 90 days to respond to an IRS 226-J Letter – i.e., a notice of a potential Employer Shared Responsibility Payment (ESRP).
- There is a six-year statute of limitations for the IRS to collect ACA employer mandate penalties.
Background and Simplified Requirements
Prior to these new laws, the ACA required certain employers and/or insurance carriers to submit Forms to the IRS by March 31 following the close of the calendar year and to distribute Forms to certain covered individuals by March 2. Such Forms are required to be distributed to individuals via paper copy, unless a specific consent is received in advance to permit electronic distribution. In addition, an employer’s initial response to an IRS 226-J letter (the notice provided to an employer who may owe penalty under the ACA employer mandate) was due within 30 days of the date of the letter, with no statute of limitations for the IRS to collect ACA employer mandate penalties.
Now, due to the Paperwork Burden Reduction Act, employers will only need to provide Forms when requested by a covered individual. Importantly, the employer must provide notice to individuals of their right to request such Forms. If an individual requests a form, it is due by January 31 or 30 days after the request, whichever is later. Further guidance is anticipated regarding such notice; also note the requirement to submit Forms to the IRS remains unchanged.
In addition, the Employer Reporting Improvement Act amends the ACA to incorporate IRS regulations which allow employers to send Forms electronically when consent is provided, and also clarifies:
- An individual’s birth date can be used in lieu of their SSN when the SSN is not available.
- Employer will have 90 days to issue a response to an IRS 226-J letter.
- A six-year statute of limitations applies for the IRS to collect ACA employer mandate penalties.
It is important to note that the above updates will not change the Form distribution requirements for the states with individual health insurance mandates (where paper distribution may still be required), which include California, Massachusetts, New Jersey, Rhode Island, and Washington D.C.
Employer Takeaways
With these new changes, employers required to comply with ACA reporting should:
- Work with their ACA reporting vendor to:
- Evaluate the best process to simplify ACA compliance, while also keeping in mind state requirements that may also apply. Practically speaking, employers may want to continue to distribute paper Forms as a best practice, depending on an employer’s workforce locations.
- Provide Forms electronically (with proper consent), if interested in pursuing this option. Practically speaking, this is already an option for employers; the new law just codifies the previous electronic delivery regulations.
- Ensure notice is provided to individuals on how to request Forms 1095-B/1095-C if no longer distributing such forms. Further information is anticipated.
Sequoia will continue to monitor and communicate updated guidance, as available.
Additional Resources
Connect with a Sequoia consultant to learn how Sequoia’s compliance services are integrated in our benefits services and tailored solutions. And if you’re already a Sequoia client, stay on top of your employer obligations with your Compliance Checklist that highlights important compliance dates, action items, and resources.
The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog. © 2024 Sequoia Consulting Group. All Rights Reserved.
