Congress Eases Employers’ ACA Reporting Burdens; IRS Supplements New Laws with Necessary Guidance

Since 2016, employers subject to the Employer Shared Responsibility provisions of the Affordable Care Act (the “ACA”) (i.e., “applicable large employers”) have been required to annually report certain information regarding their offers of group health coverage to the IRS and to applicable employees. Each year since, applicable large employers have satisfied these reporting requirements by providing Forms 1095-B and/or 1095-C, as applicable, to both the IRS and their employee by the respective deadlines for each form. Unless the employee affirmatively consented to receiving their applicable forms electronically, applicable large employers were required to provide paper copies of the forms to the employee.

In December 2024, Congress passed, and President Biden signed, two pieces of legislation aimed at easing the inherent administrative and reporting burdens experienced by applicable large employers as they seek to satisfy their annual ACA reporting obligations: the Paperwork Burden Reduction Act (the “Reduction Act”) and the Employer Reporting Improvement Act (the “Reporting Act”). On February 21, 2025, the IRS issued its interpretive guidance on portions of the Reduction Act in the form of IRS Notice 2025-15.

The Reduction Act and IRS Notice 2025-15

The Reduction Act seeks to simplify applicable large employers’ ACA reporting obligations by eliminating the requirement that employers automatically distribute ACA reporting forms to their employees. Instead, the Reduction Act now provides applicable large employers are only required to provide Forms 1095-B and 1095-C to an employee upon the employee’s request, provided that:

1. Upon the employee’s request, the applicable large employer must furnish the requested form by the later of (i) January 31 of the year following the calendar year for which the return was required to be made, or (ii) 30 days after the date of the request; and
2. The applicable large employer provides “clear, conspicuous, and accessible notice (at such time and in such manner as the Secretary may provide)” that an employee may request a copy of the form.

In response to the Reduction Act, the IRS issued Notice 2025-15 to provide further guidance on what comprises a “clear, conspicuous, and accessible notice” for this purpose:

1. The notice must be posted “clearly and conspicuously” on the applicable large employer’s website, and it must contain a statement that employees may receive copies of their Forms 1095-B and/or 1095-C upon request. The notice must also include an email address, a physical address, and a telephone number that employees may use if they have questions about how to receive copies of their forms.
2. The notice must be posted by the due date for furnishing the statement, including the automatic 30-day extension. This means that, for standard, non-leap years, the notice must posted by March 3^rd of each year (absent future guidance from the IRS which alters the standard January 31^st deadline). The notice must remain accessible to employees each year through October 15^th.

Applicable large employers should be aware that, despite the simplified method of reporting to their employees, they must still annually file applicable ACA reporting forms with the IRS by the required deadline.

The Reporting Act

The Reporting Act aims to provide relief to applicable large employers in the completion of Forms 1095-C where a covered individual’s Tax Identification Number (or “TIN”) is not known to the employer, and to provide clarity to the process for assessment and appeal of proposed penalties for an applicable large employer’s failure to satisfy its obligations under the ACA’s Employer Shared Responsibility rules. Specifically, the Reporting Act makes the following changes to the ACA reporting and penalty appeals process:

1. The Reporting Act codifies former guidance allowing an applicable large employer to substitute a covered individual’s date of birth for their TIN on applicable ACA reporting forms when the covered individual’s TIN is not available to the employer. The unavailability of a covered individual’s TIN is most often an issue with respect to an employee’s dependent.
2. The Reporting Act bolsters IRS rules allowing applicable large employers to deliver ACA reporting forms electronically to employees who consent to electronic delivery.
3. The Reporting Act provides that applicable large employers now have at least 90 days to respond to IRS letters proposing assessments of employer shared responsibility payments, an increase from the previous 30-day window. This provides much needed relief to employers who found themselves either scrambling to contest their assessments or relying on the mercy of the IRS to grant discretionary extensions to the employer’s response date.
4. The Reporting Act implements a six-year statute of limitations for the assessment and collection of ACA penalties. This provides much-needed clarity for applicable large employers when assessing potential liability for penalties under the ACA.

Next Steps for Applicable Large Employers

In response to the new rules implemented by the Reduction Act, the Reporting Act, and the corresponding IRS guidance, now is a good time for applicable large employers to assess their current ACA reporting compliance procedures and modify those procedures in a manner that allows them to minimize efforts and improve efficiency in satisfying their ACA reporting obligations. If they have not already done so for 2025, employers should begin drafting their notices to permit a reduced reporting obligation in 2026. Additionally, employers should reassess their process for obtaining TINs and determine whether the implementation of an electronic delivery process for ACA forms to employees could be beneficial to the employer based on the make-up of their workforce.