EMPLOYEE BENEF I TS
President Biden Signs ACA
Reporting Changes into Law

December 2024: Updated March 2025

Congress recently passed, and the President has signed, two laws impacting ACA reporting and
employer shared responsibility penalties. The summary below analyzes those rules.

Under Section 4980H of the Code, ALEs are subject to an
employer shared responsibility penalty if they fail to offer
sufficient coverage to their full-time employees. When
the IRS believes an ALE owes such a penalty, it sends a
letter (i.e., Letter 226-J) to the ALE informing it of the IRS’
intent to assess the penalty.  The law previously provided
that an ALE must respond to the 226-J letter within 30
days. Furthermore, the IRS could pursue employer shared
responsibility penalties against an ALE into perpetuity, with
no statute of limitations as to how long the IRS could pursue
those penalties from an ALE.

Background

The Internal Revenue Code (the “Code”) imposes
requirements on employers and insurance carriers to
report medical coverage information to both the IRS and
employees/covered individuals. Section 6055 of the Code
requires (1) the insurance carrier of fully insured coverage
to file Forms 1094-B/1095-B with the IRS and furnish Forms
1095-B to covered individuals and (2) plan sponsors of
self-insured coverage to file Forms 1094-B/1095-B with the
IRS and furnish Forms 1095-B to covered individuals. In
addition, under Section 6056 of the Code, ALEs (defined
as an employer that averaged 50 or more full-time and
full-time equivalent employees in the previous year) are
responsible for filing Forms 1094-C/1095-C with the IRS
and furnishing Forms 1095-C to employees/covered
individuals.1 Previously, the IRS required ALEs to furnish
paper copies of these forms to every full-time employee.
Employers and insurance carriers were also required to
make three attempts to secure an employee’s dependent’s
social security number before being able to substitute the
dependent’s date of birth for the dependent’s social security
number or Tax Identification Number (TIN) on the applicable
1094/1095 form.

1 Forms 1094-C/1095-C may be used to satisfy the ALE’s obligations under Section 6055 as well.

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DISCLAIMER: Brown & Brown, Inc. and all its affiliates, do not provide legal, regulatory or tax guidance, or advice. If legal advice counsel or representation is needed, the services of a legal professional should be sought. The information in this document is intended to provide a general overview of the topics and services contained herein. Brown & Brown, Inc. and all its affiliates, make no representation or warranty as to the accuracy or completeness of the document and undertakes no obligation to update or revise the document based upon new information or future changes.

Paperwork Burden Reduction Act

President Biden signed the Paperwork Burden Reduction
Act into law on December 23, 2024, formalizing IRS
guidance aimed at alleviating some of the burdens
associated with Forms 1095-B and 1095-C.

Simplification of the Furnishing Requirement to
Full-Time Employees

Under prior IRS guidance, employers and insurance
providers could comply with their obligations under Sections
6055 and 6056 by making the applicable form available to
covered individuals and full-time employees through their
website. However, an ALE that offers self-insured coverage
could use this alternative manner of furnishing Forms
1095-B or 1095-C only for non-full-time employees and
non-employees who are enrolled in the self-insured health
coverage. The alternative method could not, however, be
used for full-time employees who were entitled to a Form
1095-C.

Effective for reporting years beginning in 2024 and
beyond, the regulatory guidance authorizing an alternative
method to paper delivery has been codified and expanded.
Sections 6055 and 6056 now authorize employers and
insurance providers to distribute Forms 1095-B and 1095-C
to covered individuals and full-time employees by posting a
“clear, conspicuous, and accessible notice” that notifies full-
time employees of their ability to request their Form 1095-C
in paper form from the employer. This would absolve an
employer from having to furnish a paper copy of Form 1095-
C to every full-time employee and limit the delivery of paper
copies to only those who request it.

UPDATE MARCH 2025: New IRS guidance in Notice
2025-15 confirms that employers/insurance providers can
satisfy the “clear, conspicuous, and accessible notice”
requirement by placing a statement on their public website
in an area that’s accessible to  all full-time employees (and
covered individuals) notifying them of their ability to receive
a copy of Form 1095-B or Form 1095-C upon request. The
notice needs to include an email address, a physical mailing
address where full-time employees/covered individuals can
send requests for a copy of their Form 1095-B or Form 1095-
C, and a phone number for full-time employees/covered
individuals to call with questions.

To satisfy the rules, the notice should be written in simple,
everyday language and use a font size that’s large enough—
possibly with visual cues or graphics—clearly stating that
these are tax statements related to health coverage. For
instance, the entity’s website could feature a statement
on the main page, or a link labeled “Tax Information” that
leads to another page with a bold, all-caps heading like
“IMPORTANT HEALTH COVERAGE TAX DOCUMENTS.”
This page would explain how full-time employees/covered
individuals can request a copy of their Form 1095-B or Form
1095-C, and, if the entity is an ALE with a self-insured health
plan reporting under specific rules, the page would also
explain how non-full-time employees or non-employees
enrolled in the plan can request their Form 1095-C, while
listing the entity’s email, mailing address, and phone
number. Employer/insurance providers must post the “clear,
conspicuous, and accessible notice” on or before the annual
furnishing deadline for Forms 1095-B and 1095-C (e.g.,
March 3, 2025, for the 2024 reporting year) and keep the
notice posted until October 15 of the applicable furnishing
year (i.e., the year following the applicable reporting year).
This new guidance mirrors the alternative method of
furnishing statements to non-full-time employees in the
2024 Instructions for Forms 1094-C and 1095-C.

If an individual requests a paper copy of Form 1095-B or
1095-C, the employer/insurance provider is required to
provide the paper copy to the requester by January 31 of
the year following the reporting year or 30 days following
the request, whichever is later

State Reporting

Employers in jurisdictions that have their own individual
mandate and reporting requirements that allow plan
sponsors to use Forms 1095 and 1094 to meet these
requirements (e.g., California, New Jersey, Rhode Island,
and Washington, DC) should consult with legal counsel
to determine whether posting a clear, conspicuous, and
accessible notice is sufficient to comply with state law
requirements.

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Employer Reporting Improvement Act

President Biden also signed the Employer Reporting Improvement Act into law on
December 23, 2024, formalizing IRS guidance to alleviate some of the challenges
employers/ insurance providers face when reporting on Forms 1095-B and 1095-C (“ACA
Forms”).  This Act also makes changes with respect to the assessment of Section 4980H
employer shared responsibility penalties.

Consent for Electronic Delivery is Codified, and DOB can be a Substitute
for a Dependent’s Taxpayer Identification Number

Previously, the general rule was that these ACA Forms must be delivered to requesters
in paper form. The exception to this rule was that if an individual consents to electronic
delivery of their ACA Form, then the employer/insurance provider could deliver the ACA
Form electronically to those consenting individuals. These rules were only contained in the
ACA Forms instructions, and this new rule codifies the electronic delivery exception in the
Internal Revenue Code under the Employer Reporting Improvement Act, effective January
1, 2025.

Second, the Employer Reporting Improvement Act also permits employers/insurance
providers to use an individual’s date of birth instead of their Taxpayer Identification Number
(TIN) on Forms 1095-B and 1095-C when the TIN is not available.

Letter 226-J Extension of Response Time and Six-Year Statute of
Limitations

Additionally, under the Employer Reporting Improvement Act (effective January 1, 2025),
ALEs have an expanded timeframe to respond to IRS letters of potential Employer Mandate
violations (i.e., Letter 226-J). ALEs will now have a minimum of 90 days from the date of the
IRS’ initial letter to respond, compared to the previous 30 days from the date of the initial
IRS letter. Further, the IRS now has six years to assess Section 4980H employer shared
responsibility penalties against an ALE. The six-year period will begin with the due date for
filing the Form 1094-C or the date an ALE filed the form, whichever is later. The extended
90-day period allows for a more comprehensive review of potential penalties and the
opportunity to avoid or reduce assessments, and the six-year assessment period provides
ALEs with a clearer understanding of potential future IRS enforcement actions.

Conclusion

This legislation should be a welcome relief to employers. ALEs in particular will have
a reduced administrative burden (e.g., the ability to furnish 1095-C forms without
mailing paper copies and to report DOBs instead of TINs) and the six-year statute-of-
limitations applicable to the assessment of employer shared responsibility penalties
will provide greater certainty.  Applicable Large Employers should consult with legal
counsel on how they may meet their obligations as it relates to notifying full-time
employees of their ability to request Form 1095-C in a “clear, conspicuous, and
accessible notice” and whether they want to delay doing so until the government
releases future guidance on this topic.

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DISCLAIMER: Brown & Brown, Inc. and all its affiliates, do not provide legal, regulatory or tax
guidance, or advice. If legal advice counsel or representation is needed, the services of a legal
professional should be sought. The information in this document is intended to provide a general
overview of the topics and services contained herein. Brown & Brown, Inc. and all its affiliates, make
no representation or warranty as to the accuracy or completeness of the document and undertakes
no obligation to update or revise the document based upon new information or future changes.

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