Compliance Alert: ACA Reporting Requirements for 2026

Applicable large employers (ALEs) — generally those that employed an average of 50 or more full-time equivalent employees during the preceding calendar year (2024 for the 2025 tax year) — are required to report health coverage information to both the IRS and to covered individuals under Sections 6055 and 6056 of the Internal Revenue Code. This alert outlines the key obligations, deadlines, and practical considerations for the 2025 tax year reporting cycle.

Who Must File

Any employer that was an ALE during the 2025 calendar year must file Forms 1094-C (transmittal) and 1095-C (employee statements) with the IRS and furnish copies of Form 1095-C to full-time employees. ALE status is determined based on the prior year's full-time equivalent employee count, using the method prescribed by the IRS.

Self-insured employers that are not ALEs have separate reporting obligations under Section 6055, using Forms 1094-B and 1095-B. This alert focuses on the ALE obligations under Section 6056.

Key Deadlines

Furnishing to employees: Form 1095-C must be provided to each full-time employee. The IRS has in some years adjusted the furnishing deadline, so employers should verify current year deadlines with the IRS by checking the IRS website or consulting their tax advisor for the most current deadline applicable to the 2025 tax year. For the 2025 tax year, the deadline for furnishing Form 1095-C to employees is expected to be March 2, 2026, but employers should confirm this date.

Filing with the IRS (electronic): Employers should verify current year deadlines with the IRS for electronic filing of Forms 1094-C and 1095-C. Electronic filing is generally required for employers filing above the applicable threshold of information returns during the calendar year, which may encompass most ALEs. Employers should check current IRS guidance on the electronic filing threshold. The deadline for electronic filing is generally March 31, 2026, but this should also be confirmed.

Filing with the IRS (paper): Employers eligible to file on paper generally face an earlier deadline than electronic filers. Given the threshold for mandatory electronic filing, most ALEs will likely be filing electronically. Employers should verify current year deadlines with the IRS. The paper filing deadline is usually February 28, 2026.

What to Report

Form 1095-C requires employers to report, on a month-by-month basis for each full-time employee:

• Line 14 — Offer of coverage: The code indicating what type of coverage, if any, was offered to the employee and their dependents each month.
• Line 15 — Employee share of cost: The employee's required monthly contribution for the lowest-cost self-only minimum value coverage offered, if applicable.
• Line 16 — Applicable safe harbor or other relief: The code indicating the safe harbor used to demonstrate affordability, or the reason the employer is not subject to a penalty for that month (such as a limited non-assessment period for new hires).

For self-insured ALEs, Part III of Form 1095-C must also be completed, reporting the names and Social Security numbers of all individuals enrolled in the plan each month — including dependents.

Common Errors to Avoid

ACA reporting errors can lead to IRS penalty notices under Sections 6721 and 6722. Commonly observed mistakes include:

• Incorrect offer codes. Misidentifying the type of coverage offered — for example, coding an offer of employee-only coverage when dependent coverage was also available — is a frequent source of errors and penalty assessments.
• Wrong affordability amounts. Reporting the wrong employee contribution on Line 15, or failing to update amounts when they changed mid-year, can result in erroneous affordability determinations.
• Missing months. Failing to code all twelve months for each employee, especially for employees who experienced status changes during the year, creates incomplete filings.
• SSN and name mismatches. Discrepancies between employee names and Social Security numbers as reported on the 1095-C and as reflected in Social Security Administration records can trigger rejection or correction notices.

Penalty Exposure

Employers that fail to file accurate and timely returns face potential penalties under Section 6721 (failure to file with the IRS) and Section 6722 (failure to furnish to individuals). Penalty amounts are adjusted periodically for inflation, so employers should check the current applicable penalty rates. Penalties are assessed per return, meaning that an employer with hundreds of employees can face substantial aggregate penalties for systemic errors.

The IRS has historically provided some transition relief and good-faith penalty relief in the earlier years of ACA reporting. Employers should not assume that such relief will continue indefinitely. Accurate, timely filing is the best protection against penalties.

Practical Steps

1. Confirm ALE status for 2025 if there is any question about whether the employer meets the full-time equivalent threshold.
2. Compile monthly coverage offer and enrollment data for every full-time employee.
3. Verify employee demographic information, including Social Security numbers.
4. Review coding on Lines 14, 15, and 16 for accuracy and consistency.
5. Engage a qualified ACA reporting vendor or tax advisor if internal resources are insufficient.
6. Verify current year deadlines with the IRS and file accordingly. Retain copies of all filed forms for at least three years.

ACA reporting is a recurring annual obligation with meaningful penalty exposure. Employers who invest in careful data preparation and quality review will generally minimize their risk and avoid costly correction cycles. Employers should consult the IRS website or qualified counsel for the most current deadlines and requirements.

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This briefing is prepared by the AEA Editorial Team based on publicly available regulatory guidance, employment law developments, and employer-reported trends. Individual data from AEA members is never disclosed. All analysis reflects general observations and should not be treated as legal advice. Consult qualified counsel for guidance on specific situations.

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