Relaxing ACA Reporting Requirements

Employers who are subject to the Affordable Care Act mandate to provide health coverage are also subject to certain reporting obligations under the law—namely, they must report information about health coverage they have provided to the IRS and individuals on Forms 1095-B and 1095-C. While a new law was passed under the Biden administration to streamline the reporting process, the GOP has consistently called for rolling back the ACA reporting obligations and reducing their scope.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about calls to eliminate or reduce the ACA reporting requirements.

Below is a summary of the debate that ensued between the two professors.

Their Votes:





Their Reasons:

Byrnes: Trump's calls to reduce the ACA burdens for employers are completely justified. The detailed reporting requirements imposed by the ACA are a huge burden for small business owners in the U.S. These smaller firms have often been forced to defend themselves against incorrect IRS notices that claim they owe thousands of dollars, if not more, for failing to provide health coverage to employees as required under the ACA—all because of a reporting regime that is fundamentally flawed.

Bloink: The strict reporting requirements are in place for a reason. The purpose behind the ACA was to shift some of the burden for providing health coverage to larger employers who are better equipped to negotiate and provide this valuable employment benefit. In this context, the benefits outweigh the burden of a reporting regime that is absolutely necessary to ensuring that the law functions as intended—to ensure that millions of Americans receive the comprehensive health coverage that they need and deserve.

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Byrnes: While the largest companies have the resources to hire teams to ensure they're properly complying with the reporting rules, the reporting requirements are unnecessarily onerous for smaller companies who are attempting to comply with a law that’s flawed itself. One simple mistake can result in steep penalties that these business owners simply cannot afford.

Bloink: The reporting requirements exempt the smallest American business owners entirely from any type of coverage obligations--thus they aren't burdened by any type of reporting requirement. Further, the Biden administration took significant action to simplify and streamline the reporting obligations that do exist for larger employers by eliminating the mandate that the employer automatically must provide Forms 1095-B and C to employees who do not request them and extending the window of time that employers have to respond to IRS penalty assessments (from 30 days to 90 days following receipt of notice).

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Byrnes: We have to remember that there have been many scenarios where the IRS has sent preemptive notices and later discovers that the employee really did have coverage--and the employer is still forced to respond or risk significant penalties. The reporting process is fundamentally flawed and we shouldn’t be focused on penalizing companies who are attempting in good faith to comply with the flawed ACA employer mandate.

Bloink: The reports that are required have been streamlined over the years with the goal of ensuring that the IRS has the information necessary to ensure that employers are complying with the rules. Moreover, remember that significant transition relief was provided after the enactment of the ACA to allow smaller businesses who do cross the 50-FTE threshold time to catch up. By now, they should have implemented processes to ensure compliance.