You might have heard that Congress has made some changes that will help make ACA reporting easier. The Paperwork Burden Reduction Act, which was signed into law by President Biden just before Christmas, introduces new flexibility for employers in delivering Form 1095-C to employees. While this change aims to simplify the process, we want to ensure you understand what this means for you.
First, this law doesn’t change the necessity of tracking ACA hours and performing required employer reporting. Employers still have to create Forms 1095-C for all employees in order to do their employer reporting correctly and on time. What the new legislation does is give employers options, and employers have to make an important decision on how best to distribute Form 1095-C to their employees.
Now that there’s more flexibility on how to furnish employee and covered individual statements, employers need to decide between continuing to mail paper copies (which employees are probably used to and may rely upon for preparing their individual taxes), gearing up to make forms available upon request, or choosing to furnish electronically.
Many employers will likely still choose to either mass mail or electronically distribute these forms to all employees, to avoid the potential headache of administering an on-demand system and dealing with a series of one-off requests.
It is important to note that there are no guidelines yet available from the IRS about how to meet the law’s requirements to notify employees about the change and their rights to request a form. As such, we encourage employers to continue sending forms as they have in previous years until that guidance is issued.
Finally, the fact that this law is a bipartisan initiative bolsters what we’ve been telling employers for some time – the ACA is not going anywhere anytime soon.
Stay tuned for more information about this law and what it means for your reporting obligations and options.
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