For over a decade, Applicable large employers (ALEs), those with 50 or more full-time equivalent employees, have been required to annually report health insurance coverage information to the IRS and to employees on Form 1095-C, and to distribute the Form 1095-C to employees. On December 23, 2024, Public Law 118-167, known as the “Paperwork Burden Reduction Act” (the Act) was enacted to simplify this reporting process. The IRS issued a notice with guidance on the Act that provides that employers are no longer required to automatically furnish Forms 1095-C to individuals, and that there is now an alternative way for employers to provide these forms and satisfy the reporting requirements.
While these changes are not brand new, the timing of enactment in late 2024 meant that it was too late for many employers to implement the alternative reporting format in time for reporting of 2024 coverage in 2025. However, employers who did not already make the switch may want to consider this option for the upcoming 1095-C reporting season in 2026 for 2025 coverage.
Alternative Reporting Option: The Act introduces a more flexible approach to delivering Form 1095-C health insurance statements. Under the Act:
Employers can satisfy the new 1095-C reporting requirements by posting a clear and conspicuous notice that is reasonably accessible to all applicable employees on an employer’s website or benefits portal.
The notice must inform individuals that they can request a copy of their Form 1095-C and instructions for requesting it.
The notice must be posted on the employer’s website by the time that the Form 1095-C would otherwise need to be furnished to individuals and must remain up on the employer’s website through October 15 of the year following the calendar year to which the statement relates.
If requested, the employer must provide the Form 1095-C to the requesting individual by the later of January 31 of the year following the year to which the Form 1095-C relates or within 30 days of the date that the request is received.
The notice must be written in plain language and with letters of a font size large enough, including any visual clues or graphic figures, to call to a viewer’s attention that the information pertains to tax statements and health insurance coverage reporting.
The notice must include the employer’s email address, physical address, and telephone number for individuals to contact with questions.
Note that employers must continue to adhere to any state requirements for furnishing Forms 1095-C, as some states still require that Forms 1095-C be physically mailed to individuals. In addition, Forms 1095-C must still be filed with the Internal Revenue Service (IRS), even if they are not provided to all employees.
This change is designed to ease the administrative burden associated with health insurance reporting by reducing unnecessary paperwork. It allows employees to access their Form 1095-C with an on-demand access model and eliminates the confusion of another notice for employees who do not need their Form 1095-C.
If you are thinking about implementing the alternative reporting option and have questions, then please reach out to your Foley attorney or a member of Foley’s Employee Benefits and Executive Compensation team.
