New ACA Reporting Changes in 2025: What Employers Need to Know

New Changes to ACA Reporting Requirements Offer Welcome Relief to Employers

The Affordable Care Act (ACA) is streamlining employer reporting requirements starting in 2025, which is bound to ease the burden on many businesses.

Simplified Form 1095 Distribution

From the 2024 reporting year, employers aren't obliged to send Form 1095-C to all full-time employees. They only need to provide these forms upon request. To comply with this new rule, employers must:

• Post a notice of availability that is clear, conspicuous, and accessible.

• Distribute the form within 30 days of an employee's request, or by January 31 if later.

• Offer electronic distribution, provided the employee consents (valid until withdrawn in writing).

Despite this change, it's crucial to keep preparing and filing Forms 1095-C and 1095-B with the IRS annually, alongside the Form 1094-C/1094-B transmittal form, typically due by March 31.

Options for filing include services like EASE, Employee Navigator, or your payroll company. Ease charges $5 per qualified employee, and Tax Bandits is another budget-friendly option.

Extended Response Time for ACA Penalty Letters

The response window for Letter 226J, which concerns employer shared responsibility payments under Section 4980H, is being extended to 90 days. This timeframe starts for taxable years beginning after December 23, 2024. The extension offers employers more opportunity to adequately address and review the issues raised, especially when employees opt for the Marketplace over employer plans due to income considerations.

New 6-Year Statute of Limitations for ACA Penalties

A 6-year statute of limitations will now apply to the IRS’s assessment of ACA penalties. Effective for returns due after December 31, 2024, this limit begins on the return's due date or the filing date, whichever is later. This change replaces the previous lack of a statute of limitations.