The Employer Reporting Improvement Act, signed into law on December 23, 2024, updates the reporting requirements under the Affordable Care Act (ACA) to make it easier for employers and health insurance providers to comply while ensuring that individuals have the necessary health coverage.

Under the ACA, employers and health insurance providers must report proof of minimum essential coverage to the IRS through tax forms 1095-B and 1095-C. These forms must include the covered individual’s name and Taxpayer Identification Number (TIN), and a copy must be sent to the individual by January 31 each year. The new law introduces several key changes to these reporting procedures.

One major update is how TINs are handled. If a TIN is unavailable, employers and providers can now substitute the individual’s date of birth instead. This makes reporting easier when a TIN cannot be obtained. Additionally, the law allows employers and providers to send these forms electronically, but only if the individual has agreed to receive them this way. The individual can revoke this consent at any time, giving them control over how their information is shared.

The act also affects large employers—those with 50 or more full-time employees. These employers are required to offer affordable health coverage under the ACA. If they fail to do so, they could face penalties from the IRS. The law increases the time employers must respond to an IRS penalty notice. Previously, they had 30 days to respond; now they have at least 90 days after receiving the IRS’s initial notice (Letter 226-J) to address the issue.

Additionally, the act introduces a six-year statute of limitations for the IRS to assess penalties for failing to offer affordable coverage. This extended time frame gives employers more leeway to resolve any issues and ensures penalties are not imposed too quickly.

In summary, the Employer Reporting Improvement Act streamlines ACA reporting requirements, provides more time for employers to respond to penalty notices, and offers greater flexibility in how health coverage information is reported. These changes simplify the process for employers while ensuring continued compliance with ACA regulations.