Finally, Some Good News About ACA Reporting: Less Paperwork (potentially)

The ACA reporting requirements (i.e., Forms 1095-B and -C) always create a lot of work and headaches for PEOs, so anytime the government offers relief—we’ll happily take it. Just as many PEOs were working to help their clients with yet another round of federal tax information reporting under the Affordable Care Act, President Biden signed into law the Paperwork Burden Reduction Act on December 23, 2024. In contrast to many other laws, the Paperwork Burden Reduction Act is a law that might actually do what it claims—reduce paperwork! It may provide PEOs with additional flexibility for furnishing Forms 1095-B and -C to individuals on behalf of clients while still meeting their ACA obligations.

In many ways, the Paperwork Burden Reduction Act continues the trend of reducing the burden of ACA reporting. This new law expands certain flexibilities that the Department of the Treasury and the Internal Revenue Service previously provided through regulations at the end of 2022. Those regulations provide for an alternative method of furnishing Forms 1095-B and -C. This alternate method allows a reporting entity to provide a notice regarding the availability of Forms 1095-B or -C, rather than directly providing the Forms 1095-B and -C to the responsible individuals. However, as noted below, this previous regulatory flexibility was limited—it could not be used by all employers for all individuals. The new law hopefully will give additional employers (and PEOs) the ability to access the relief.

PREVIOUS TREASURY REGULATIONS

In 2022, the Department of the Treasury and the Internal Revenue Service released final regulations that allow for limited flexibility in furnishing Forms 1095-B or -C to responsible individuals. The regulations provide specific rules for the notice. Under these rules, reporting entities must post a notice in a location on their website that Forms 1095-B or -C are available upon request. In addition, the notice must be written in plain, non-technical terms and the notice must remain in the same location on the website until October 15 of the following year. In addition, the reporting entity must provide an email address, a physical address, and a phone number to field these requests. Under this regulation, the reporting entity must provide the form to the individual within 30 days upon request.

While the flexibilities provided in the regulations were well received, this alternative method of furnishing was limited to reporting entities that furnish Forms 1095-B and self-insured applicable large employers that furnish forms to part-time employees and non-employees enrolled in the employer’s self-insured plan. Interested parties requested that the IRS extend this alternative method of furnishing to full-time employees, because the individual mandate requirement had effectively been eliminated, and also for administrative ease. However, the Department of the Treasury and the Internal Revenue Service declined to extend the relief to all employers for all individuals in the final regulation.

NEW LAW EXPANDS THE ALTERNATIVE METHOD OF FURNISHING STATEMENTS

While the Department of the Treasury and the Internal Revenue Service declined to extend this furnishing flexibility across the board, Congress stepped in to pass the Paperwork Burden Reduction Act at the end of 2024. The Act was signed into law by President Biden and allows all reporting entities to take advantage of a similar alternative method of furnishing statements for all entities furnishing Forms 1095-B and -C to responsible individuals. Under the new law, an employer will be able to simply post a notice to their website informing individuals that Forms 1095-B or -C are available upon request. Provided certain rules are followed, we think client employers may even be able to provide notice by providing a link to their PEO’s website. But employers will need to follow the rules set forth in Notice 2025–15…

THE IRS RELEASES NOTICE 2025–15

In order to provide additional guidance following the Paperwork Burden Reduction Act, the IRS released Notice 2025–15 to provide additional clarity on what reporting entities must do to use the alternative method of furnishing statements for Forms 1095-B and -C. Notice 2025–15 provides that if reporting entities comply with the 2022 final regulations relating to the alternative method of furnishing (subject to a few changes), then the reporting entity will satisfy their furnishing obligations under the statute. Note that, although the deadline to furnish Forms is generally March 2 under the Paperwork Burden Reduction Act, the deadline for requested forms is the later of January 31 or 30 days after the request.  This means that, if, for example, someone requests a Form relating to 2025 coverage before 2026 begins, the employer must furnish the Form by January 31, 2026—which is earlier than the regular deadline (March 2, 2026).  Reporting entities should think carefully about how they draft the notice informing individuals that they can request a Form in order to avoid these types of premature requests.

TAKEAWAYS FOR PEOS

PEO clients that are “applicable large employers” under the ACA rules (i.e., generally 50 or more full-time employees) were previously unable to use the alternative method of furnishing for their full-time employees. Now, thanks to the new law and IRS Notice 2025–15, they may be able to fulfill their ACA furnishing obligations by going the paperless route. This could make ACA furnishing both simpler and cheaper for PEOs and their clients. But PEOs and client employers taking advantage of these flexibilities will need to coordinate on the website notice, and ensure that they set up appropriate systems to timely respond to requests for these forms.

While the flexibility for furnishing these forms will be helpful to PEOs, it is important to note that these flexibilities do not change any of the ACA filing obligations relating to Forms 1095-B and -C (and the accompanying transmittal Forms 1094-B and -C). In other words, employers may not have to furnish forms if they use the relief, but they will still have to complete the forms and file them with the IRS. In addition, nothing in the new law or notice changes any reporting obligations under state laws.

This article is designed to give general and timely information about the subjects covered. It is not intended as legal advice or assistance with individual problems. Readers should consult competent counsel of their own choosing about how the matters relate to their own affairs.