Legislation to Reform the ACA’s Employer Reporting Requirements

Employers have long sought relief from the burden of the reporting requirements under Sections 6055 and 6056 of the Affordable Care Act (ACA) for enforcement of the individual and employer mandates. Currently, employers and health insurance providers that provide minimum essential coverage must report information for each covered individual to the Internal Revenue Service (IRS), including the covered individual’s social security number. Employers and providers must also send a copy of this information to the covered individual (through tax forms 1095-B and 1095-C) by January 31 of each year.

The error rate of 82% is indicative of how confusing and complicated the reporting is for employers.

Failure to report accurately and in a timely fashion leaves employers subject to tax penalties and additional costs for correcting their filings. There is no limit to how many years back the IRS can go when auditing tax forms 1095-B and 1095-C. An employer has 30 days to respond to the letter 226-J that notifies them of a proposed assessment.

Several efforts have been made to simplify the process.

During the 117th Congress, H.R. 5318 – Commonsense Reporting Act of 2021, was sponsored by Rep. Mike Thompson (D-CA) and Rep. Adrian Smith (R-NE). This legislation aimed to streamline the employer reporting process and strengthen the eligibility verification process for the premium assistance tax credit and cost-sharing subsidy. Also, during the 117th Congress, S.3673 – Commonsense Reporting Act, was introduced by Sen. Mark Warner (D-VA) and Sen. Rob Portman (R-OH). Unfortunately, neither H.R. 5318 nor S.3673 made it to the floor for a vote.

H.R. 3801

In the current 118th Congress, Reps. Thompson and Smith introduced H.R. 3801 – The Employer Reporting Improvement Act. It is adapted from S. 3673. The legislation would:

• Allow employers to substitute an individual’s full name and date of birth in place of a taxpayer identification number in certain circumstances, starting with tax returns due in 2025.
• Give certain large employers at least 90 days to respond to the first letter from the Treasury Department outlining a proposed shared employer responsibility payment, beginning in the taxable year after the date of the bill’s enactment.
• Specify that information that would be reported would include name and employer identification, who has been extended an offer of minimum essential coverage, whether coverage meets minimum value and the affordability safe harbor, and months that coverage is available without waiting periods.
• Allow employers to deliver reports to employees electronically without another consent form.
• Establishes a six-year statute of limitations for collecting assessments.

This bill passed the House on June 21, 2023, and it has moved to the Senate where it was referred to the Committee on Finance.

The National Association of Benefits and Insurance Professionals (NABIP), formerly NAHU, has made H.R. 3801 a legislative priority.

NABIP is the leading professional association for health insurance agents, brokers, general agents, and consultants. They have issued an “Operation Shout,” encouraging members to meet with their federal legislators over the August recess to discuss this legislation and ask for their support.

If passed by the Senate and signed into law by the president, this legislation would make the health insurance market more efficient and responsive to American employers and individual consumers.

EPIC offers this material for general information only. EPIC does not intend this material to be, nor may any person receiving this information construe or rely on this material as, tax or legal advice. The matters addressed in this document and any related discussions or correspondence should be reviewed and discussed with legal counsel prior to acting or relying on these materials.