When the Affordable Care Act (ACA) first landed on the scene in 2010, it reshaped employer-sponsored health coverage by imposing an “employer mandate” on Applicable Large Employers (ALEs). Fast-forward to 2025, and Congressional action has dramatically lightened the paperwork burden and shifted key deadlines—changes all HR managers need to understand and implement this year. Below, we break down what’s new, compare old versus new requirements, unpack the implications for your organization, and outline concrete steps to stay compliant.

Introduction

The ACA’s employer mandate requires ALEs (generally, those with 50+ full-time equivalents) to offer affordable, minimum-value coverage or face excise taxes—known as Employer Shared Responsibility Payments (ESRPs). Since enactment, HR teams have wrestled with annual preparation and distribution of Forms 1094-C/1095-C (to employees and the IRS), monitoring affordability thresholds, and responding to IRS penalty notices (Letter 226-J).

On December 23, 2024, President Biden signed two landmark bills into law:

1. Paperwork Burden Reduction Act (H.R. 3797)
2. Employer Reporting Improvement Act (H.R. 3801)

These statutes take effect for the 2024 reporting year (forms due in 2025), fundamentally changing how—and how often—employers furnish statements, expanding electronic delivery, extending response time for IRS penalty notices, and even capping how far back the IRS can assess employer mandate penalties (natlawreview.com, wtwco.com).

For HR leaders juggling compliance calendars, benefits communications, and penalty-avoidance strategies, these adjustments represent both opportunity and responsibility. Read on for a detailed tour of the new landscape—and your must-do updates this year.

ACA Employer Mandate Changes Overview

Below is a high-level look at the two new Acts and their core provisions:

Paperwork Burden Reduction Act (PBRA)

• Furnishing Upon Request Only
  ALEs no longer need to automatically distribute IRS Forms 1095-B/1095-C to all full-time employees. Instead, they must provide them only if an employee requests the form .
• Notice Requirement
  Employers must post a clear, conspicuous, and accessible notice on their website (or in another major communication channel) informing employees of their right to request the form.
• Extended Furnishing Timeline
  Once requested, the form must be furnished by the later of January 31 of the following year or within 30 days of the request .
• Electronic Delivery
  Electronic distribution is permissible with employee consent—any prior consent to receive electronic communications qualifies, unless revoked in writing.

Employer Reporting Improvement Act (ERIA)

• Response Window Extended
  Employers now have 90 days (up from 30 days) to respond to IRS Letter 226-J, which initiates the penalty assessment process under IRC §6056 .
• Statute of Limitations Established
  A six-year cap on employer mandate penalty assessments begins on the later of the due date of the return or its filing date, ending the IRS’s indefinite look-back period (wtwco.com).
• Codification of Existing Relief
  • Substituting an individual’s name and date of birth for a TIN if obtaining the TIN is not feasible
  • Electronic distribution rules for Forms 1095-B/1095-C with consent[;.

Comparing Pre- and Post-Legislation Requirements

To visualize the practical impact, the table below contrasts “Before” (pre-2025) and “After” (2025 reporting year onward) across key dimensions:

Penalties and Enforcement Changes

Understanding enforcement shifts is crucial:

• Longer Response Window
  The jump from 30 to 90 days for Letter 226-J responses gives you breathing room to gather data, verify coverage offers, and prepare rebuttals.
• Limited Look-Back
  With a six-year cap, ALEs can more reliably forecast potential liabilities, as IRS assessments cannot stretch indefinitely.
• Price for Non-Compliance
  Failure to respond timely or substantively can fast-track a penalty; use the extended window wisely by assembling key stakeholders (legal, benefits, payroll) to craft your response strategy.

Affordability Threshold Update

Under the ACA, an ALE must offer coverage deemed affordable—no more than a set percentage of household income. For plan years beginning in 2025, the IRS has increased the affordability percentage to 9.02% (up from 8.39% in 2024).

• Why It Matters
  A higher threshold can provide employers more flexibility in cost-sharing designs without triggering ESRPs.
• Safe Harbors
  Employers can calculate affordability using one of three methods:
  1. Federal Poverty Line Safe Harbor
  2. Rate of Pay Safe Harbor
  3. W-2 Safe Harbor
• Practical Tip
  Re-run your affordability models (using your carrier or broker’s tools) to confirm compliance and adjust payroll deductions if necessary.

Implications for HR Managers

These changes ripple across several HR functions:

1. Benefits Administration
   • Evaluate whether to continue annual distribution of Form 1095-C or pivot to “upon request” only.
   • Map out the notice delivery strategy:
     • Website banner, intranet posting, or email blast.
     • Maintain an auditable record of posting dates.
2. Payroll & Systems
   • Configure HRIS to track requests, trigger form generation, and auto-e-deliver within the mandated timeframe.
   • Update electronic consent management to capture any revocations.
3. Compliance Calendar
   • Shift your ACA reporting timeline: calendar year close → request window open → forms due by March 3 (employee copies) and March 31 (IRS e-file) (mp-hr.com).
   • Embed new response-to-Letter 226-J milestones.
4. Communication & Training
   • Educate employees on how to request ACA statements.
   • Train HR team members on new statutes of limitations and penalty processes.
5. Vendor & Broker Coordination
   • Engage carriers and third-party administrators to confirm they support electronic delivery workflows and updated consent protocols.

 Action Steps for HR Managers

To operationalize these changes, follow this six-point checklist:

1. Decide Distribution Strategy
   • Annual vs. “upon request”—align with organizational capacity.
2. Draft & Publish Notice
   • Website posting by March 2; retain through Oct 15 of the following year (wtwco.com).
   • Include clear instructions (email, physical address, phone number).
3. Configure Systems
   • Automate request tracking, deadline alerts, and electronic delivery consents.
4. Update ACA Reporting Calendar
   • Employee copies due by March 3, 2025; IRS filings due by March 31, 2025 (e-file only) (mp-hr.com).
   • Schedule a 90-day window for penalty response drills.
5. Review Plan Design
   • Validate contributions against the 9.02% affordability threshold; adjust payroll deductions if needed.
6. Train & Communicate
   • Host webinars or distribute FAQs on how employees can request Forms 1095-B/1095-C.
   • Provide HR staff with process guides for responding to Letter 226-J.

Where to Find Official Guidance

For comprehensive details, consult the following authoritative sources:

• IRS Employer Shared Responsibility Information
  https://www.irs.gov/affordable-care-act/employers
• Revenue Procedure 2024-35 (Affordability Percentage)
  https://www.irs.gov/pub/irs-drop/rp-24-35.pdf (wtwco.com)
• HealthCare.gov—Employer Shared Responsibility Payment (ESRP)
  https://www.healthcare.gov/glossary/employer-shared-responsibility-payment/ (healthcare.gov)

Conclusion

The Paperwork Burden Reduction Act and Employer Reporting Improvement Act fundamentally reshape your ACA compliance playbook. From slashing mailings to granting six extra weeks to tackle IRS penalty notices, the new laws provide welcome relief—but only if HR managers proactively update systems, communications, and calendars this year.

By:

• Embracing the “upon request” model
• Posting compliant notices
• Automating form distribution and consent tracking
• Re-validating affordability under the 9.02% threshold
• Embedding the 90-day penalty-response window

—you’ll not only reduce administrative overhead but also fortify your organization against avoidable penalties.

Ready to streamline your ACA compliance? Begin today by reviewing your ACA distribution policy, updating your HRIS workflows, and scheduling your 226-J response tabletop exercise. And for complete details, visit the official IRS Affordable Care Act Employers page.

Call to Action:
Have questions or looking for hands-on support? Reach out to your benefits broker or legal counsel—or drop a note below—and let’s get your ACA compliance up to speed for 2025!