The Affordable Care Act (ACA) imposes specific reporting requirements on employers, insurers, and certain other entities to demonstrate compliance with the law's employer and individual mandates. This reporting, often referred to as ACA reporting, is the process of submitting information to the Internal Revenue Service (IRS) and providing statements to covered individuals about the health coverage offered (or not offered) during the preceding calendar year. The data is used by the IRS to verify that applicable large employers (ALEs) offered affordable, minimum-value coverage to their full-time employees and that individuals maintained minimum essential coverage. Failure to file correctly and on time can result in significant penalties, making it critical for any organization subject to the rules to understand the forms, deadlines, and compliance steps.

Who Must Report Under the ACA?

ACA reporting obligations fall primarily on two groups: applicable large employers and providers of minimum essential coverage. An applicable large employer (ALE) is any employer that had an average of at least 50 full-time employees (including full-time equivalent employees) during the prior calendar year. For example, if an employer averaged 52 full-time employees in 2023, it is an ALE for the 2024 reporting year. ALEs must file Forms 1094-C and 1095-C. Additionally, any employer that offers a self-insured health plan — even if they have fewer than 50 employees — must report using Forms 1094-B and 1095-B. Insurers that provide group health insurance, regardless of the employer's size, also file Form 1094-B and 1095-B. Finally, health insurance marketplaces (exchanges) issue Form 1095-A to individuals who enrolled in coverage through the marketplace. The reporting threshold is based on the number of employees, not on revenue or industry, and employers should count all employees across all locations. The IRS provides a calculation method for full-time equivalent employees, which includes part-time hours worked.

Key Forms and Their Purpose

There are three main sets of ACA reporting forms, each serving a distinct purpose. The most common for employers are the Form 1094-C (transmittal) and Form 1095-C (employee statement). Form 1094-C is a summary of the employer's entire workforce, while Form 1095-C is an individual record for each full-time employee. The 1095-C shows the months the employee was offered coverage, the employee's share of the lowest-cost monthly premium, and whether the coverage met minimum value and affordability standards. Employers with self-insured plans also complete Part III of the 1095-C to list covered individuals. For insurers and small employers with self-funded plans, the forms are Form 1094-B and Form 1095-B. These are simpler, requiring only the name, address, and Social Security number of each covered individual, along with months of coverage. The Form 1095-A is used exclusively by marketplaces to report enrollment in qualified health plans. It is crucial to use the correct form set: an ALE with a fully insured plan files only 1095-C (not 1095-B), while an ALE with a self-insured plan files 1095-C with Part III. The forms are due to individuals by January 31 (or the next business day) and to the IRS by February 28 (paper) or March 31 (electronic) of the year following the coverage year. For example, for 2024 coverage, the deadlines are:

Form Furnish to Individuals File with IRS (Paper) File with IRS (Electronic)
1095-C (ALE) January 31, 2025 February 28, 2025 March 31, 2025
1095-B (Insurer) January 31, 2025 February 28, 2025 March 31, 2025

Penalties for Non-Compliance

The IRS imposes two layers of penalties related to ACA reporting: one for failing to file correct information returns and one for failing to offer affordable coverage. The information-reporting penalty under Section 6721 applies if you file a return that is late, incorrect, or incomplete. For 2024 returns filed in 2025, the penalty is approximately $310 per return if corrected within 30 days, $630 per return if corrected after 30 days but before August 1, and $1,260 per return if corrected after August 1 or not filed at all. The maximum annual penalty for a large employer is capped at around $4.5 million for intentional disregard. In addition, the employer mandate penalty under Section 4980H applies if an ALE fails to offer affordable, minimum-value coverage to at least 95% of its full-time employees, and any employee receives a premium tax credit. For 2024, the penalty under Section 4980H(a) is approximately $2,970 per full-time employee (excluding the first 30 if the employer fails to offer coverage). The penalty under Section 4980H(b) for offering unaffordable coverage is roughly $4,460 per employee who receives a subsidy. These amounts are adjusted annually for inflation. It is important to note that the IRS can assess both the reporting penalty and the mandate penalty if the employer fails to report properly and also violates the coverage requirement.

How to Prepare for ACA Reporting

To avoid penalties and stress, employers should start preparing for ACA reporting well before the end of the year. First, determine your ALE status by calculating the average number of full-time employees (including full-time equivalents) for the prior year. If you are an ALE, you must track offers of coverage for each month and record the employee's share of the lowest-cost monthly premium. Use a payroll or HR software that can generate the required forms, or hire a third-party vendor that specializes in ACA compliance. Collect complete employee data, including names, addresses, Social Security numbers, and months of coverage. For self-insured plans, also gather information on dependents and spouses covered. Ensure that all data is accurate and consistent across forms. The IRS requires electronic filing if you file 10 or more information returns (including 1095-Cs and 1095-Bs). You can use the IRS FIRE system or a third-party transmitter. Finally, before the deadline, review the forms for common errors such as missing months, incorrect offer codes, or mismatched employer identification numbers. The IRS offers a validation tool in the ACA Reporting Portal to check for errors before submission.

Frequently Asked Questions

What is the difference between Form 1095-C and Form 1095-B?

Form 1095-C is used by applicable large employers (ALEs) to report coverage offered to full-time employees. It includes details about the offer of coverage and affordability. Form 1095-B is used by insurers and small employers with self-insured plans to report the months of coverage for each individual. An ALE with a fully insured plan files only 1095-C, while an ALE with a self-insured plan files 1095-C with Part III (which essentially replaces the 1095-B for those employees). Small employers that are not ALEs but offer self-insured coverage file the 1095-B.

What happens if I miss the deadline to furnish forms to employees?

If you miss the January 31 deadline to provide forms to employees, you may face the information reporting penalties described above. However, the IRS often grants a 30-day extension if you file a timely request using Form 8809. Even if you are late, furnishing the forms as soon as possible can reduce the penalty amount. It is best to file electronically to meet the later IRS deadline of March 31.

Do I need to report if I offer coverage to all employees?

Yes, even if you offer coverage to all full-time employees and meet the affordability and minimum value requirements, you must still file Forms 1094-C and 1095-C with the IRS and provide 1095-Cs to each full-time employee. The reporting is mandatory for all ALEs, regardless of whether the coverage is affordable. The forms are used to verify that no employee receives a premium tax credit due to lack of coverage.

Closing Thoughts

ACA reporting is a detailed, annual compliance obligation that requires careful planning, accurate data collection, and timely filing. By understanding who must report, which forms to use, and the deadlines and penalties involved, employers can avoid costly mistakes and potential audits. The IRS provides resources, including the ACA Information Returns (AIR) program and the ACA Reporting Portal, to help filers. For most businesses, using a dedicated payroll provider or tax software is the most reliable way to manage the process. As the IRS continues to enforce the employer mandate, staying compliant with ACA reporting is not just a legal requirement but a smart financial practice. Begin preparing early, double-check your data, and consult a tax professional if you have any doubts about your obligations.