On Monday, December 23, 2024, President Biden signed into law two bills,H.R. 3797 (the “Paperwork Reduction Act”)  andH.R. 3801 (the “Employer Reporting Improvement Act”), which will positively impact applicable large employers (“ALEs”) and other entities required to furnish forms 1095-B or 1095-C to individuals. 

Key Provisions of the Paperwork Reduction Act (PRA):

• Simplified Form Furnishing: Employers could meet furnishing requirements by providing employees with a notice that they can request a copy of Form 1095-B/C, which must be provided either by January 31 or within 30 days of the request.
• Effective Date: These changes would apply to forms for the calendar year 2024, due in 2025.
• E-File Requirement: Applicable Large Employers (ALEs) must continue to electronically file forms with the IRS.
• State-Specific Requirements: These provisions do not override any state-specific requirements.                   

Employers and Insurers May Post Notice of Availability in Lieu of Mailing Forms

Pursuant to the Paperwork Burden Reduction Act, employers who are ALEs or who sponsor self-funded plans may furnish forms to employees upon request (in lieu of by mail) if they post a clear, conspicuous, and accessible notice that the forms are available to anyone required to receive the Forms 1095-B or 1095-C upon request, and provide the forms no later than the later of January 31^st or 30 days after the date of such request.



Per IRS Notice 2025-15, the notice requirement mirrors the penalty relief already in place for furnishing the 1095-B forms to individuals. Specifically, the employer must post a clear and conspicuous notice in a location on its website that is reasonably accessible to full-time employees stating that full-time employees may receive a copy of their 1095-C upon request, accompanied by an email address, phone number and a physical address the request can be sent.

The website notice must be written in plain, non-technical terms and with letters of a font size large enough, including any visual clues or graphical figures, to call a viewer’s attention that the information pertains to tax statements reporting that full-time employees had health coverage. As with the Form 1095-B, a statement or link on the company’s main page reading “Tax Information”, which takes users to a secondary page that includes a statement in capital letters such as “IMPORTANT HEALTH COVERAGE TAX DOCUMENTS”, would meet this requirement. 

The deadline for publishing the notice is the same deadline that applies to furnish the forms to full-time employees by mail (i.e., January 31 plus the automatic 30-day extension, which for this year was March 3, 2025 for the 2024 tax year. Next year the deadline for 2025 reporting is March 3, 2026). Further, pursuant to the Employer Reporting Improvement Act, Form 1095-B or 1095-C can be provided electronically to employees who have consented to receive forms electronically.

Key Provisions of the Employer Reporting Improvement Act (ERIA):

• Electronic Form Delivery: Employers can furnish Forms 1095-B/C electronically with employee consent.
•  Alternate Information Use: Employers can use an individual’s date of birth instead of a Social Security Number for Form 1095-B/C reporting. 
• This only applies if SSN cannot be collected.
• This does not apply to Form 1095-C for employees.
• Extended Response Time: The response time for initial Employer Shared Responsibility Payment (ESRP) letters is extended to 90 days, effective from 2025 assessments.
• Statute of Limitations (SOL): A 6-year SOL is established for the IRS to seek an ESRP, starting from the required filing date of Forms 1094-C and 1095-C.

Summary of the New Laws:

The Paperwork Reduction Act considers employers to meet their requirement to furnish form 1095-B or 1095-C to employees if the following conditions are met:

• The employer or reporting entity (e.g., insurance carrier) provides a clear, conspicuous, and accessible notice that any individual who is otherwise required to receive the form 1095-B or 1095-C can request a copy, and
• The employee can request a copy of the form, which the employer or reporting entity must provide no later than:       

       * January 31 of the year following the calendar year for which the return was required to be made, or
       * 30 days after the date of such request.

The Paperwork Reduction Act is effective for calendar year 2024 forms that must be furnished to employees in 2025.

The Employer Reporting Improvement Act allows employers to provide form 1095-B or 1095-C to individuals electronically if they have consented to receive it electronically. It also allows employers to use an individual’s date of birth, in lieu of a social security number, if the social security number is not available when completing the forms, except when reporting the employee on form 1095-C. 

In addition, the Employer Reporting Improvement Act provides employers more time to respond to IRS ESRP letters. In many cases, employers are given approximately 30 days to respond to an initial ESRP letter from the IRS; however, the new law requires the IRS to give employers 90 days to respond to the initial letter before the IRS can take any action against the ALE. This gives employers significantly more time to review Letter 226J and gather the necessary data to prepare an appeal. The law applies to assessments proposed in taxable years beginning after the enactment of the law, so initial Letters 226J sent after December 23, 2024. It will not extend the deadline for Letters 226J already sent to employers before December 23, 2024.

Finally, the Employer Reporting Improvement Act established a 6-year statute of limitations, beginning from the date the forms 1094-C and 1095-C were required to be filed (or the date they were filed if filed after the filing deadline) for the IRS to seek an ESRP. This portion of the law is effective for the 2024 tax year forms (which are due in 2025) and beyond.

Recommended Actions and Notes for Employers:

• These legislative updates simplify federal reporting processes and provide greater flexibility but do not impact state reporting obligations.
• Awareness of effective dates, adjusted timelines, and differing federal and state requirements is crucial to avoid penalties.
• The language relating to the notice to employees currently lacks guidelines; we will be keeping close for adjustments.

     Should you have any questions or need further assistance, please do not hesitate to contact us. 

Disclaimer: SyncStream Solutions does 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. SyncStream Solutions makes 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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