ACA Reporting Requirements: Annual Reminders

Who Must Report

Applicable Large Employers (ALEs) - those with 50 or more full-time equivalent employees in the prior year - must comply with ACA reporting requirements under Internal Revenue Code Sections 6055 and 6056.

Required Forms

Form 1095-C

Employers must furnish Form 1095-C to each full-time employee. This form reports:

• Whether minimum essential coverage was offered
• The employee's share of the lowest-cost monthly premium
• Months of coverage

Form 1094-C

This is the transmittal form filed with the IRS along with all 1095-C forms. It includes summary information about the employer and its coverage offerings.

Key Deadlines

• Employee copies: Under final IRS regulations, the furnishing deadline is March 2 (or the next business day if March 2 falls on a weekend or holiday). The Paperwork Burden Reduction Act, enacted in December 2024, allows employers to furnish Form 1095-C only upon request as long as a clear, conspicuous, and accessible notice is posted that the form is available on request.
• IRS filing (paper): Due by February 28
• IRS filing (electronic): Due by March 31. Under final regulations effective for returns required to be filed on or after January 1, 2024, the electronic filing threshold dropped from 250 returns to 10 or more information returns of any type filed during the calendar year, so most ALEs are now required to file electronically.

Common Compliance Issues

1. Incorrect employee counts: Misidentifying full-time status by not including all hours worked
2. Incorrect coding: Using wrong indicator codes on Line 14, 15, or 16
3. Missing employees: Failing to report on all full-time employees for every month
4. Late filings: Missing deadlines triggers penalties per form
5. Inconsistent data: Information on 1095-C not matching what was reported to employees or on other tax forms

Avoiding Penalties

• Start data collection and preparation early
• Verify employee hour records and full-time status determinations
• Review forms for accuracy before distribution and filing
• File electronically when possible to reduce errors
• Maintain copies of all forms and evidence of timely distribution

Penalties

Penalties for non-compliance can be significant:

• Failure to file correct information returns with the IRS
• Failure to furnish correct payee statements to employees
• Penalty amounts are adjusted annually for inflation

The IRS has shown willingness to enforce these penalties. Take reporting obligations seriously and allocate adequate resources to ensure compliance.