Employer Guide to ACA Reporting Requirements

Who Must Report

The Affordable Care Act imposes reporting requirements on two groups of employers:

Applicable Large Employers (ALEs) — employers with 50 or more full-time employees (including full-time equivalents) in the prior year — must report under Section 6056 of the Internal Revenue Code using Forms 1095-C and 1094-C.

Self-insured employers of any size must report under Section 6055 using Forms 1095-B and 1094-B. Self-insured ALEs satisfy both requirements through Forms 1095-C and 1094-C.

Small employers that are not ALEs and offer fully insured coverage generally have no ACA reporting obligations. The insurance carrier handles Section 6055 reporting for fully insured plans.

Determining ALE Status

Count your full-time employees (those averaging 30 or more hours per week) and full-time equivalents (total hours of part-time employees divided by 120 per month). If the combined total averaged 50 or more during the prior calendar year, you are an ALE for the current year.

Count all employees across all entities in your controlled group. Related companies under common ownership may be aggregated for ALE determination purposes, even if each individual entity has fewer than 50 employees.

Form 1095-C: What It Reports

Each ALE member must furnish a Form 1095-C to every full-time employee. The form reports:

Part I: Employee and employer identification information.

Part II: The offer of health coverage. For each month, you must report whether coverage was offered, the employee's share of the lowest-cost self-only premium, and which safe harbor or other code applies. This section uses a series of alphanumeric codes (e.g., 1A for a qualifying offer, 1E for minimum essential coverage offered to employee only).

Part III: Completed only by self-insured employers, this section lists the individuals (employee and covered dependents) enrolled in coverage each month.

Common Reporting Errors

Incorrect coding for months of transition. When an employee is hired, terminated, or changes status mid-year, make sure the monthly codes accurately reflect what was offered and when.

Failing to report offers to dependents. The ACA requires ALEs to offer coverage to dependent children up to age 26. The 1095-C must reflect whether dependent coverage was offered, even if the employee declined.

Wrong affordability safe harbor. The IRS provides three affordability safe harbors: the W-2 safe harbor, the rate of pay safe harbor, and the federal poverty line safe harbor. Make sure you apply the correct one consistently and that it is reflected in the line 16 codes.

Missing or incorrect Social Security numbers. The IRS requires SSNs for all covered individuals. If an SSN is unavailable, you must make a reasonable effort to obtain it, documented by at least two solicitations.

Filing Deadlines

Forms 1095-C must be furnished to employees by the IRS-established deadline, typically in early March. The transmittal forms (1094-C) and copies of all 1095-C forms must be filed with the IRS by the applicable deadline, with a later date allowed for electronic filing. Always check the current year's deadlines, as the IRS has granted extensions in the past.

Electronic filing is mandatory for employers filing 250 or more forms.

Practical Steps

1. Maintain accurate monthly records of hours worked, coverage offers, and enrollment for every employee.
2. Identify your full-time employees each month using either the monthly measurement method or the look-back measurement method.
3. Choose an affordability safe harbor and apply it consistently.
4. Reconcile your data before filing — cross-check enrollment records against payroll records and carrier reports.
5. Retain copies of all filed forms and supporting data for at least four years.
6. Work with your benefits administrator or payroll provider to ensure the forms are generated accurately. Many reporting errors originate from incomplete or inconsistent data feeds.

ACA reporting carries penalties for both failure to file and filing incorrect information. Investing in data quality and process controls on the front end is far less costly than responding to IRS penalty notices after the fact.