2025 Changes to ACA Reporting: What Employers Need to Know

The Affordable Care Act (ACA) reporting requirements are getting a significant update in 2025, thanks to the recently enacted Employer Reporting Improvement Act and Paperwork Burden Reduction Act. These changes aim to streamline the reporting process and ease some of the administrative burdens for employers.

Key Updates

1. Form 1095-C Only Provided Upon Request

   Employers are no longer required to automatically distribute Form 1095-C to all full-time employees. Instead, employees must request a copy if they need one. However, employers are responsible for: Informing employees of their right to request the form.

2. Ensuring the notice is clear and accessible.

   The IRS has not yet issued guidelines on when or how this notice should be provided. However, once an employee requests a Form 1095-C, employers must send it within 30 days or by January 31 of the following year—whichever is later.

3. More Flexibility in Reporting Taxpayer Identification Numbers (TINs)

   The IRS may allow employers to report an individual's full name and date of birth on Form 1095-C if they are unable to obtain a TIN (such as a Social Security Number).

   This change is especially helpful for employers struggling to collect TINs for dependents, particularly nonresident aliens who may not have a Social Security Number or other reason to obtain a TIN. However, we are still waiting on official IRS guidance before employers can make this change.

4. Defined Statute of Limitations for Employer Penalties

   A six-year statute of limitations is now in place for the IRS to assess and collect employer shared responsibility payments. This gives employers a clear timeframe for potential liability, reducing uncertainty.

5. More Time to Respond to IRS Penalty Letters

   Employers now have at least 90 days (instead of the previous 30-day window) to respond to IRS letters regarding employer shared responsibility payment assessments. This extra time allows employers to address any errors—such as incorrect ACA reporting codes—before penalties are finalized.

What Employers Should Do Now

✅ Continue Filing Form 1095-C: Even though distribution rules have changed, employers must still prepare and file these forms annually with the IRS (generally by March 31).

✅ Prepare a Notice for Employees: Stay alert for IRS guidance on how to notify employees about their right to request Form 1095-C. If the IRS provides a model notice, employers can use it. Until then, it’s a good idea to develop a process for notifying employees.

✅ Ensure You Have Full Names & Birth Dates on File: If obtaining TINs has been a challenge, employers may want to proactively collect full names and birth dates in case the IRS allows this alternative reporting method.

While we await further IRS guidance, these changes signal a step toward simplifying ACA compliance for employers. Keeping up with these updates now will help ensure a smooth transition into your reporting requirements for 2025.

Need help navigating these changes? Feel free to reach out for expert guidance.