2025 ACA Reporting Changes Ease Compliance Burden for NY Employers

Two significant federal laws enacted in December 2024—the Paperwork Burden Reduction Act and the Employer Reporting Improvement Act—are bringing welcome relief to New York employers struggling with ACA compliance paperwork. These changes, effective at the beginning of 2025, streamline reporting requirements while maintaining essential worker protections.

What the Law Requires

Under the new regulations, Applicable Large Employers (ALEs) are no longer required to automatically furnish Form 1095-C to employees annually. Instead, employers must provide the form only upon employee request and notify workers of their right to request it. The time to respond to IRS Letter 226-J penalty assessments has been extended from 30 to 90 days for taxable years beginning after December 23, 2024. Additionally, a six-year statute of limitations now applies to employer shared responsibility payment collections for returns due after December 31, 2024.

For 2025, the ACA affordability threshold remains at 9.02% of household income. Employers face potential penalties of $2,900 per full-time employee for failing to offer coverage, or $4,350 per employee who receives premium tax credits due to unaffordable or inadequate coverage.

Impact by Business Size

• Small businesses (under 50 employees): While not subject to ACA employer mandates, these businesses benefit from simplified Form 1095-C distribution requirements if they voluntarily provide coverage. They should establish systems for handling employee requests for tax forms.
• Mid-size companies (50-500): As ALEs, these employers gain significant administrative relief from automatic form distribution while maintaining compliance obligations. The extended 90-day response period for IRS penalty letters provides more time for thorough documentation review.
• Large employers (500+): These organizations see the most substantial administrative cost savings from eliminated automatic form distribution requirements. However, they must implement robust systems to track and fulfill employee requests while monitoring the 9.02% affordability threshold across potentially complex compensation structures.

Compliance Deadlines

The new reporting requirements are already in effect as of January 2025. Employers must ensure notification systems are in place to inform employees of their right to request Form 1095-C. The 90-day response period for Letter 226-J assessments applies to all penalty letters issued for taxable years beginning after December 23, 2024. Annual ACA reporting deadlines remain unchanged, with Forms 1094-C and 1095-C still due to the IRS by February 28 (or March 31 if filing electronically).

New York employers should also be aware of the state's Healthy NY program requirements, which mandate that participating small businesses contribute at least 50% of premiums and maintain 30% of employees earning $55,260 or less annually.

Next Steps

Review your current ACA reporting processes to take advantage of these new administrative efficiencies while maintaining full compliance. Update employee communications to explain the new Form 1095-C request process, and ensure your payroll systems can accurately track the 9.02% affordability threshold. Benton Oakfield's compliance team can help you navigate these requirements, optimize your reporting systems, and ensure your business stays compliant with both federal ACA mandates and New York-specific regulations. Contact us to review your policies and implement these beneficial changes.

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