ACA Reporting Due in March, Take Advantage of New Reporting Relief

Purpose: The Affordable Care Act (ACA) mandates annual reporting each March under IRS sections 6055 and 6056.

• This works similar to W-2 and W-3 forms, with a 1095 individual statement (much like the functions of a W-2), and a 1094 transmittal cover sheet (much like the functions of a W-3).
• The 1095 statement is due to individuals by March 2, and those 1095 statements with a 1094 transmittal cover sheet must be electronically filed with the IRS by March 31.
• There is new reporting relief that may allow employers to provide statements to individuals upon request if the employer provides proper language on their main public webpage by March 2 and keeps it there through October 15.

Applies To:

• The 1094-C and 1095-C forms are required of an ALE for calendar year 2025 based on averaging 50 or more full-time and equivalent employees in calendar year 2024 (subject to specific counting rules, including a combined count with commonly owned/controlled employers in a Controlled Group or Affiliated Service Group).
• The 1094-B and 1095-B forms are required of a non-ALE for calendar year 2025 who sponsored a self-insured or level-funded medical plan or an ICHRA.
  • For example, MA requires different forms than the 1095 and 1094.
  • As another example, NJ requires proactively providing the 1095 individual statement to NJ residents. So, posting language on the employer’s public website with instructions for requesting the 1095 is not relief an employer can rely upon in NJ. State requirements/deadlines may be different in CA, DC, MA, NJ, and RI.

Suggested language: Here is a suggestion for a clear and conspicuous notice the average person could reasonably be expected to see (public website, not behind a login) and understand.

IMPORTANT HEALTH COVERAGE TAX DOCUMENTS

Pursuant to federal law, you may receive a copy of your IRS form 1095-B (Health Coverage) and/or 1095-C (Employer Provided Health Insurance Offer and Coverage) upon request. To request a copy of your form 1095, please contact:

           Email: [insert email address]

           Phone: [insert phone number]

           Postal Mail: [insert mailing address]

Upon request, the form will be provided within 30 days of your request. This notice applies to coverage provided for the applicable tax year. Please retain the form for your records

Penalties for Non-Compliance:

• The penalties for late, incomplete, or incorrect reporting of 2025 forms due in March 2026 are $680 per form not correctly and timely provided to individuals plus $680 per form not correctly and timely e-filed with the IRS.
• This is reduced to $60 each if accurate and complete forms are provided within 30 days following the deadline, reduced to $130 each if provided by August 1, and $340 if provided after August 1. In addition, there is a new six-year statute of limitations for the IRS to pursue Employer Shared Responsibility Penalties (ESRPs) which cannot begin until the later of the reporting deadline or the date accurate and complete forms are submitted. Thus, submitting incomplete or incorrect forms and having to resubmit later delays the start date of the employer’s statute of limitations protections, exposing them to the potential penalties for more than six years.

Practical Impact to Employers:

• ALEs are fully responsible for compliance with the 1094-C and 1095-C forms. Insurance companies and Third-Party Administrators (TPAs) will not provide this as a service. While most ALEs outsource the creation of the forms to a third party like their payroll administrator, Human Resources Information Systems (HRIS) vendor, or benefits administration platform, the ALE is responsible for all aspects of compliance, including accuracy, completeness, deadlines, and providing proper website notices. The new six-year statute of limitations may not begin on time if reporting is inaccurate, incomplete, or otherwise delayed.
• Non-ALEs sponsoring level-funded plans may find the insurance carrier willing to complete the 1094-B and 1095-B process on the employer’s behalf, but the employer is still fully responsible.
  • Otherwise, only non-ALEs with fully insured medical coverage all 12 months of the calendar year are exempt from reporting.
  • Non-ALEs without an exception need to ensure they fully comply with the 1094-B and 1095-B reporting requirements and provide proper website notice.