ACA Employer Reporting Summary

ACA Employer Reporting Summary 

Certain employers, plan sponsors, and insurers are required to report health plan information and participant coverage data to the IRS each year. The IRS uses this information to administer and regulate various aspects of the Affordable Care Act (ACA), including an individual’s eligibility for a premium tax credit when purchasing health insurance through a public Marketplace and the §4980H employer shared responsibility rules. Failure to report complete, accurate, timely information can result in significant reporting penalties up to $330/form. 

Employer Reporting Responsibilities 

Applicable Large Employers (ALEs) – All ALEs (generally those with at least 50 full-time equivalents (FTEs)) are required to report on offers of coverage to full-time employees. ALE status is determined by averaging FTEs for the previous calendar year. For example, if an employer averaged 50 or more FTEs during 2023 (alone or as part of a larger controlled group or affiliated service group), the employer is an ALE for 2024 and required to report offer of coverage information early in 2025 (for the 2024 calendar year). ALEs report offer of coverage information using Forms 1094-C and 1095-C. 

NOTE: Offer of coverage reporting on the “C” forms will never be handled by the carrier, but instead must be done by the employer or a vendor on behalf of the employer. 

Employers Offering Self-Funded (or Level-Funded) Group Health Plan Coverage – Any size employer who provided level-funded or self-funded coverage during 2024 must report coverage information for all individuals enrolled in the plan, including employees, non-employees (e.g., owners, retirees, COBRA participants), and their spouses and dependents. Small employers (<50 FTEs, non-ALEs) report this coverage information using Forms 1094-B and Form 1095-B. ALEs generally report this coverage information in Part III of the Form 1095-C. 

Timing of Reporting 

Employer reporting is required annually and is done early in the year for the previous calendar year. Reporting is always based on calendar year data (even for employers with a non-calendar year medical plan). 

Copies of 1095s to individuals can be provided by hand delivery, mail, or electronically if consent is obtained from the individual to receive the 1095 electronically. In addition, solely for the 1095-B, there is an option to simply post availability of the form upon request on the employer’s website if certain requirements are met. 

For almost all employers, Form 1094 and all Form 1095s must be submitted to the IRS electronically. 

Electronic Filing Requirements 

Employers who file 10 or more tax forms must file electronically (previously only those filing 250 or more forms were required to file electronically). The count includes not only Form 1094 and Form 1095s, but also any other information tax returns the employer may file during the year (e.g., W-2s or 1099s), and therefore, almost all employers will be required to file electronically. This is also true for any corrections that may need to be filed. Most employers do not file electronically with the IRS themselves; most use the services of a vendor or use payroll or reporting software that handles the electronic transmittal to the IRS on their behalf. 

State Coverage Reporting 

A handful of states (CA, MA, NJ and RI) and D.C. have individual coverage mandates requiring residents to have minimum essential coverage or pay a state tax penalty. To enforce these mandates, these states require group health plans, both fully insured and self-funded, to report coverage information to the states. Employers offering group health plans with covered individuals residing in these states may be required to send in reporting to the state tax department in addition to the coverage information submitted to the IRS. In most cases, the same Form 1094 and Form 1095s can be sent to the applicable state tax department to satisfy the reporting requirement. 

Resources 

IRS forms and instructions can be found on the IRS website. 

• Form 1094C 
• Form 1095C 
• Form 1094B 
• Form 1095B

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