As we enter into 2025, employers should be aware that the new year brings in new laws that will have an impact on the compliance obligations for plan sponsors of both fully-insured and self-insured health plans. One of these changes that will have an immediate impact on the compliance obligations for plans sponsors is the Paperwork Burden Reduction Act. As part of the employer shared responsibility requirements under the Affordable Care Act (ACA). Applicable Large Employers (ALEs) are required to file a Form 1094-C (transmittal) along with a Form 1095-C for each of its full-time employees to the IRS by March 31st of each year (if filed electronically). Additionally, the ALE is required to furnish the Form 1095-C to its full-time employees by January 31st of each year (automatically extended to March 3, 2025). It is this second obligation (the furnishing of the Form 1095-C) that is impacted by the enactment of the Paperwork Burden Reduction Act.
The Paperwork Burden Reduction Act, which became law on December 23, 2024 and is effective for 2024 coverage reporting, establishes an alternative method for satisfying the requirement to furnish the Form 1095-C to employees and covered individuals by providing that employers will be treated as furnishing the written statements if:
- The employer notifies each individual entitled to receive a Form 1095-C that he or she may request a copy of the Form 1095-C and
- The employer furnishes a copy to any individual making the request by the later of January 31 of the year following the calendar year for which the Form 1095-C was required to be made or 30 days after the date of the request.
The Act does not specify when the notice must be provided or detail any additional information that must be included in the notice. It only states that the notice must be “clear, conspicuous and accessible.” It is anticipated that additional guidance will be forthcoming but it is unclear whether this additional guidance will be issued before the January 31st deadline.
In the absence of additional guidance on the content of the notice, we anticipate that a good faith interpretation of the notice requirement will be sufficient to comply with this aspect of the new rule. Given the upcoming deadline, it is our recommendation that you issue the notice to employees as quickly as possible.
It is important to note what the change in the law does not do. It does not relieve employers of the obligation to complete the Forms 1095-C. Employers are still required to prepare the Forms 1095-C and file those forms along with the Form 1094-C with the Internal Revenue Service by March 31st (if filed electronically) or February 28th (if filed by mail). Employers also need to keep in mind that strict enforcement of employer shared responsibility reporting remains in effect. This means that the information included on the Forms 1094-C or 1095-C filed with the IRS is presumed to be correct and can lead to substantial penalties. Employers should carefully review these Forms to ensure that the Forms are filled out correctly and that the correct codes are used throughout.
For employers interested in this alternative method and needing assistance drafting a notice to employees, please contact our attorneys, Alexandra A. Ifrah or Joshua M. Osborne. We will be happy to assist with this request.
You may also contact our attorneys if you have any questions regarding the completion of the Forms 1094-C/1095-C.