Question: What employee benefits-related items are in the year-end round of legislation?

Short Answer: The HSA telehealth relief will be extended for another two years. ACA reporting has become easier by removing the need to distribute the Forms 1095-C to full-time employees except upon request. ACA employer mandate penalty assessments are now subject to an extended 90-day review period and a six-year statute of limitations.

It’s the most wonderful time of the (legislative) year. With the year closing, a funding bill needed to be addressed, and the new Congress and President incoming shortly after the start of the year, Congress is finally motivated to get a few things passed before the changeover. Fortunately, we have a few stocking stuffers for employee benefits to enjoy as the holidays approach.

HSA Telehealth Relief Extended Two Years (Again!)
The government funding bill that released this week (the Further Continuing Appropriations and Disaster Relief Supplemental Appropriations Act, 2025) again extends by two years the HSA telehealth relief first made available in the CARES Act. Subsequent CAA 2022 and CAA 2023 extensions were set to expire for plan years beginning on or after January 2025 before this latest extension. The new two-year extension provides stability for the relief through plan years beginning before January 1, 2027 (i.e., through 2026 for calendar plan years). The bill appears likely to pass by the end of the week or early next week.

One of the key requirements for all HDHP coverage is that the plan impose at least the statutory minimum deductible prior to paying for non-preventive covered services. This year-end HSA stocking stuffer continues to provide relief from that minimum deductible requirement for telehealth and other remote care services—regardless of whether such services are preventive. The legislative package therefore allows individuals to maintain HSA eligibility even where their HDHPs waives the deductible for any telehealth or other remote care, or where separate telehealth vendors are made available to HDHP participants at no cost to participants.

The Small Lump of Coal
At this point after multiple waves of extensions, it would have been nice if Congress had simply decided to make the relief permanent. The purpose of the relief no longer appears to have any connection to the Covid pandemic, and therefore there does not appear to be any reason to time-limit the relief. The perpetual cliffhangers at the end of each wave of relief cause employers to unnecessarily scramble to adopt plan changes that preserve HSA-eligibility—only to have to undo them each time when the impetus proves moot.

• For more details: Newfront Go All the Way with HSA Guide

ACA Reporting No Longer Requires Furnishing of Forms 1095-C to All Full-Time Employees
The Paperwork Burden Reduction Act is perhaps one of the first appropriately named Congressional bills in recent memory. In surprisingly bipartisan fashion in both the House (simple voice vote) and Senate (unanimous consent), Congress has changed the ACA reporting rules to significantly streamline the process. President Biden is expected to sign the bill into law in the coming days.

Under the Paperwork Burden Reduction Act provisions, Applicable Large Employers (ALEs) no longer have to furnish Forms 1095-C to all full-time employees. Instead, ALEs simply have to make the Forms 1095-C available upon request, beginning now with the 2024 ACA reporting forms that are due at the start of 2025.

To take advantage of this new “alternative manner of furnishing statements,” ALEs must:

1. Notice of Availability: Provide employees with clear, conspicuous, and accessible notice that they may request a copy of the Form 1095-C; and

2. Provision Upon Request: If the employee requests a copy, the employer must provide a copy by the later of a) January 31, or b) 30 days after the date of the request.

The same approach has already been available for Forms 1095-B provided by insurance carriers and non-ALEs with self-insured health plans, previously referred to as the “§6055 furnishing relief.” This bill codifies the relief for 1095-B purposes and—most significantly—extends it to the Forms 1095-C provided by ALEs.

The Congressional Record in the House demonstrates a veritable bipartisan love fest between the Ways and Means Chairman Jason Smith (R-MO) and the Democrat Representative Jimmy Panetta (D-CA), with the latter espousing “It is understandable why it is so popular because the one thing that we can all agree on is that we need to reduce unnecessary burdens on taxpayers and small businesses.”

The Small Lump of Coal
Why did it take a decade of ACA reporting to get to this point if there was no objection by either party? Also, it is not yet clear how employers are to provide the notice of availability of the Form 1095-C to employees (the new law states that this will be determined by the IRS), or whether the automatic 30-day extension that has been available to furnish the Form 1095-C (i.e., until early March) also applies to the period to provide the notice of availability and/or the Form 1095-C in response to a request. Plus, employers still need to (electronically) file all the ACA reporting forms with the IRS.

For more details: ACA Reporting Requirements in 2025

ACA Employer Mandate Penalty Assessment Improvements
The Employer Reporting Improvement Act recently passed by Congress also includes two meaningful changes for ALEs. President Biden is expected to sign the bill into law in the coming days.

Additional Time to Respond to IRS Letter 226J
Under current IRS practice, employers have only a 30-day period to respond to an IRS Letter 226J that includes a proposed ACA employer mandate penalty assessment. Employers often struggle to understand the letter, gather historical materials, and respond accordingly within that short 30-day window. For example, employers may need time to review offer of coverage documentation and prior Forms 1094-C and 1095-C for accuracy—particularly given that the assessment typically relates to an employee filing that occurred three years ago.

The Employer Reporting Improvement Act now states that the IRS must provide employers with at least 90 days from the date to respond before taking any further action with respect to the proposed assessment. This is good news for employers that may have such assessments reduced or eliminated when afforded sufficient time to provide satisfactory evidence to the IRS that the penalty is incorrect because of a prior reporting error.

• For more details: Responding to IRS Letter 226J

Statute of Limitations for Employer Mandate Penalties
The Employer Reporting Improvement Act clarifies that there is a six-year statute of limitations for any ACA employer mandate penalty assessment. Effective as of the current ACA reporting season at the start of 2025, the ability to assess an employer mandate penalty now expires at the end of the six-year period beginning on the due date for filing the associated Forms 1094-C and 1095-C.

Note: The IRS previously took the position that there was no statute of limitations that applied in this context. So this is a major win going forward for ALEs.

Codification of Form 1095-C DOB Substitution and Electronic Distribution Rules
The Employer Reporting Improvement Act also codifies into statute existing IRS rules addressing when employers are permitted to use a dependent’s date of birth where the SSN/TIN is not available, as well as when employers are permitted to furnish the Form 1095-C to employees via electronic delivery.

• For more details: ACA Reporting Requirements in 2025

The Small Pebble of Coal
Congress missed an opportunity to streamline the notoriously difficult Form 1095-C electronic delivery furnishing rules to more closely mirror the relatively relaxed ERISA electronic disclosure safe harbor. Nonetheless, this is only a small pebble of coal given that employers will far less frequently need to furnish the Forms 1095-C under the relief made available under the Paperwork Burden Reduction Act described above.

PBM Compensation and Disclosure Overhaul…in 2028
Lastly, the government funding bill that released this week (and likely to pass before the holidays) also includes a major section addressing long sought-after oversight of pharmacy benefit management (PBM) services that is applicable for plan years beginning on or after 30 months following enactment (as of 2028 for calendar plan years). It is fortunate that there is a long delay before enforcement because the new rules include extensive compensation and disclosure requirements that will require significant time for the industry to fully understand and prepare to implement.

Summary
These are welcome stocking stuffers for employers, and with any luck they may signal additional potential bipartisan opportunities in the coming term for simplification of the complex web of employee benefit laws.

Disclaimer: The intent of this analysis is to provide the recipient with general information regarding the status of, and/or potential concerns related to, the recipient’s current employee benefits issues. This analysis does not necessarily fully address the recipient’s specific issue, and it should not be construed as, nor is it intended to provide, legal advice. Furthermore, this message does not establish an attorney-client relationship. Questions regarding specific issues should be addressed to the person(s) who provide legal advice to the recipient regarding employee benefits issues (e.g., the recipient’s general counsel or an attorney hired by the recipient who specializes in employee benefits law).