ACA reporting refers to the mandatory filing of specific forms (Forms 1094-C and 1095-C) with the IRS by employers to comply with the Employer Shared Responsibility Provisions of the Affordable Care Act. These forms report health insurance coverage provided to employees.
Applicable Large Employers (ALEs) with 50 or more full-time employees or full-time equivalents, are required to file ACA reports to the IRS and provide copies to employees.
An ALE is a business or organization that employs at least 50 full-time employees or full-time equivalent employees, based on the previous year’s workforce size.
Generally, ACA forms must be filed:
Employers with 10 or more forms must file electronically via the IRS’s AIR (Affordable Care Act Information Returns) system. Employers with fewer forms can opt to file by paper.
Failure to file ACA forms by the deadline can result in penalties. The IRS may impose fines for late filings or incorrect/incomplete information.
Employers must report Minimum Essential Coverage (MEC), which refers to any insurance that meets the ACA’s standards for covering essential health benefits.
Part-time and seasonal workers are generally not counted as full-time employees, but part-time hours can be used to calculate full-time equivalent employees to determine ALE status.
If an ALE fails to offer coverage that meets ACA standards (affordable and minimum value) to at least 95% of its eligible full-time employees and their dependents, it may face an Employer Shared Responsibility Payment (ESRP) penalty.
To ensure compliance, employers should:
Penalties vary depending on the violation:
Individuals may receive a Form 1095-C showing the health coverage offered by their employer. They don’t need to file this form with their tax return but should keep it for their records.
If you’ve already submitted a form with incorrect information, you must file a corrected version with the IRS and provide a corrected copy to the employee.
Permanently extends the deadline for furnishing a given year’s Forms 1095-B & 1095-C to individuals until 30 days after January 31 of the immediately following year.
