ACA Reporting Relief: Two New Laws for 2025

Updated of 2/27/25

Distribution of Form 1095s

The IRS instructions for 2024 reporting indicate Form 1095s must be distributed to full-time employees and covered individuals by March 3, 2025. The options for distribution of Form 1095s are:

1. Hand delivery
2. Mail
3. Electronically if individuals consent to electronic delivery
4. NEW – Post a notice of availability and then only deliver if requested. For the 2024 reporting year, the notice must be posted by March 3, 2025 and remain in the same location on the website through October 15, 2025.

Original Publication Date 1/24/2025

On December 23, 2024 two legislative provisions were signed, simplifying employer ACA reporting requirements and aiming to modernize processes and reduce administrative burdens. While they don’t significantly change existing requirements, they offer some relief.

The fundamental requirements of Who, What, and When remain unchanged.  Federal deadlines are still March 3 to distribute the 1095 forms to individuals and March 31 to electronically transmit the 1094/1095 forms to the IRS.

• “C” forms are for Applicable Large Employers (ALEs) with 50 or more ACA full-time equivalent employees in the prior calendar year.
• “B” forms are for small employers with a self-funded plan in the reporting year.

The legislation only applies to federal ACA employer reporting requirements and does not impact state-level reporting for 2024 in CA, MA, NJ, RI, and DC.

Employer Reporting Improvement Act (HR3801)

Reporting Individual Coverage Information
For covered dependents, the birthdate can be used when the SSN/TIN is unavailable. This option was previously available but required efforts to obtain the SSN. This only affects self-funded employers, as dependent data for fully insured plans is handled by carriers.

Electronic Distribution of 1095 Forms to Individuals
Employers can now rely on an employee’s prior written consent indefinitely, unless revoked. While electronic distribution was already permitted, previously consent was meant to be obtained annually.

Extended Response Time for Proposed IRS Assessments
Employers will have 90 days to respond to an IRS 226-J penalty letter, up from 30 days. This change technically applies to letters related to the 2025 tax year, but in practice, it has limited impact since the IRS has historically granted extensions.

Statute of Limitations on IRS Assessments
Starting with the 2024 tax year, the IRS has established a six-year statute of limitations to collect penalties related to ACA employer shared responsibility requirements. Previously, the IRS took the position that no statute of limitations applied. It’s worth noting that the IRS is currently issuing letters for the 2022 tax year.

Paperwork Burden Reduction Act (HR3797)

Alternate Method for Distributing 1095s to Individuals
Employers can now choose to distribute 1095 forms only upon request. The forms must be available for distribution by January 31, 2025. Paper forms must be provided within 30 days of a request, or electronically if the employee consents.

To use this option, employers must provide a “clear, conspicuous, and accessible notice” to employees by January 31, 2025. The notice can be posted on the employer’s website or portal in accordance with IRS electronic delivery guidelines. It must include instructions on how to submit requests, along with an email address, mailing address, and phone number. While an IRS model notice is not yet available and no additional guidance has been issued, you can refer to the 2024 IRS instructions for Form 1095-B (page 5, “Alternative manner of furnishing statements”) for provisions that can also apply to the “C” forms.

If you choose to use this method, ensure your system partner can accommodate it, then create and post the notice and establish a consistent, compliant delivery process.

Considerations:

• The IRS has not released guidelines on the specific content or format of the notice.
• Handling one-off requests may be administratively burdensome.
• This option requires 1095 forms to be ready by January 31, a month earlier than the current federal deadline.
• System partners may not currently support electronic distribution or allow 1095 forms to be distributed without full distribution to individuals.

This information is general and is provided for educational purposes only. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors.