5 Must-Know Compliance Updates

1. Electronic Distribution of Forms 1095-B and 1095C: The Paperwork Burden Reduction Act (HR 3797) was signed into law December 24th, 2024. The Act allows employers to furnish Forms 1095-B and 1095-C electronically, eliminating the need to provide paper copies. Employer must provide clear and accessible notice to employees about the availability of these forms and furnish upon request by January 31 or within 30 days of the request, whichever is later.

2. Use of Employee Birth Dates for ACA Reporting: The Employer Reporting Improvement Act (HR 3801) permits employers to use an employee’s date of birth in place of a taxpayer identification number (TIN) on Forms 1095-B and 1095-C if the TIN is unavailable.

3. Extended Response Time for IRS Notices: The Employer Reporting Improvement Act (HR 3801) provides employers 90 days, increased from 60 days, to respond to IRS notices related to proposed assessments under the Affordable Care Act (ACA). This extension provides employers additional time to address and resolve issues.

4. Adjusted ACA Affordability Threshold: For the 2025 plan year, the Affordable Care Act (ACA) affordability threshold has increased to 9.02%, this is up from 8.39% in 2024. Employers with 50 or more employees, must ensure that the cost of employee-only coverage does not exceed this percentage to avoid potential penalties. Review and adjusting employee premium contributions accordingly is essential.

5. Updated Employee Benefit Plan Limits: The IRS has announced inflation-adjusted limits for various benefits.

   1. Health Savings Accounts (HSAs): Contribution limits for individual coverage are $4,300 and $8,600 for family coverage. Individuals 55 and older still have $1,000 additional for catch up contributions.

   2. Health Flexible Spending Accounts (FSAs): The contribution limit is $3,050 per employee.