Health Plan Responsibilities: 2 New Laws Just Eased Your Burden

Some of your year-end health plan responsibilities have lifted, thanks to eleventh-hour legislation from Congress.

Plan sponsors that meet certain conditions — such as providing notification — no longer need to send employees the Affordable Care Act (ACA) forms that provide details on their health coverage. That starts with calendar year 2024 forms, which you’re preparing early in 2025.

This reprieve resulted from legislation that became law on Dec. 23, 2024. It’s HR 3797, the Paperwork Burden Reduction Act.

A second bill, enacted on the same date, brought more good news to employers. Thanks to HR 3801, the Employer Reporting Improvement Act, the employer shared responsibility payment (ESRP) has become less daunting.

Here’s a closer look at both laws.

Handling Health Coverage Forms

Assuming you meet the requirements spelled out in the Paperwork Burden Reduction Act, you no longer need to furnish Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, to employees each year.

The new law states that you’ll need to provide a clear, conspicuous and accessible notice to inform employees that if they would otherwise receive copies of the ACA forms from you, they can request copies.

If such a request is made, then you must furnish a copy of the statement by the later of the following dates:

• January 31 of the year following the calendar year in which you provided the health coverage, or
• 30 days after the date of the request.

An alternative method of furnishing Form 1095-B, Health Coverage, to employees existed prior to the Paperwork Burden Reduction Act. As with Form 1095-C, that alternative method involves providing notification to employees.

With either form, if you don’t take the prescribed notification steps, you must follow the usual procedures for delivering ACA forms to employees. The deadline for getting Forms 1095-C and Forms 1095-B to employees is Jan. 31, 2025 — but the automatic extension pushes the deadline out to March 3, 2025.

It’s important to note that the Paperwork Burden Reduction Act didn’t alter the requirement to send Forms 1095-B and Forms 1095-C to the IRS. For calendar year 2024, the deadline to submit those forms is Feb. 28. 2025 (paper filers) or March 31, 2025 (electronic filers).

Another word of caution: State laws regarding health plan reporting still apply.

What If IRS Sends You Letter 226-J Now?

The Employer Reporting Improvement Act will help plan sponsors in the event the IRS sends a letter regarding a proposed assessment.

Letter 226-J is the initial letter the Service issues, notifying an applicable large employer (ALE) of a potential ESRP liability. When determining whether an ALE may owe an ESRP, the IRS pulls information from Forms 1095-C, as well as the individual income tax returns that employees file at tax time.

By way of background, although employers are subject to penalties under the ACA, individuals found relief under the Tax Cuts and Jobs Act. That 2017 law, in effect, eliminated the individual shared responsibility payment (ISRP).

Since 2019, the ISRP has been zero.

Meanwhile, in calendar year 2025, here’s just one of the ACA penalties employers may have to pay: $2,900 per full-time employee (minus 30) for failing to offer minimum essential coverage to 95% of full-time employees and their dependents — if any full-time employees sign up for a health plan on the Exchange.

What the Employer Reporting Improvement Act did was extend the amount of time you have to respond if you receive Letter 226-J from the IRS.

You now have 90 days, up from 30 days.

The new law also limits the number of years during which penalties can add up. There’s now a statute of limitation, and it’s six years.

The clock starts ticking from the due date of the form or the date the return was filed — whichever is later.

So now, employers are no longer at risk of incurring penalties for long-standing errors.

Stay informed regarding other new laws and how they’re affecting employers. HRMorning offers live and on-demand webinars, such as Trump’s Agenda & HR: Understanding Legislative Actions and Preparing for Impact.