Sarah Borders, CEBS February 3, 2025 12 min read

Affordable Care Act (ACA) Reporting Overview

Overview

For each calendar year, an employer must evaluate whether they have an obligation to submit health coverage reporting under Internal Revenue Code sections 6055 (reporting who was enrolled in health insurance) and 6056 (reporting whether an applicable large employer, or ALE, offered health insurance to full-time employees and their dependents).

 

Applies To

  • ALEs with fully-insured, level-funded, or self-funded health plans, including ICHRAs (Forms 1095/1094-C)
  • Small employers with level-funded health plans or ICHRAs (Forms 1095/1094-B)

 

Go Deeper

  • Section 6055 requires health insurance providers to report which employees and family members were enrolled in health insurance during the previous calendar year.
    • Insurance companies complete this for only the months the health plan was fully insured.
    • Otherwise, the employer is responsible for reporting all of the months employees and family members were enrolled in level-funded or self-funded health coverage or an ICHRA.
  • Section 6056 requires ALEs to report offers of health insurance to full-time (FT) employees and their dependents during the previous calendar year.
    • Insurance companies do not submit this reporting. Each employer is solely responsible to determine their status as an ALE, and submit reporting to the IRS.
    • ALEs who are also responsible for 6055 reporting of their level-funded, self-funded or ICHRA plan can satisfy both 6055 and 6056 reporting requirements on Form 1095-C.

Step 1: Identify Whether an Employer Must Report

As you look at the calendar year, there are two determinations the employer must make to identify their reporting obligations.

  • Was the employer an ALE (or ALE member) for the calendar year?
    • This is based on whether previous calendar year employment counts averaged 50 or more full-time and equivalent employees (FTEs). There is specific calculations to count the number of FT employee each month, converting part-time hours to FTEs each month and determining whether seasonal employees can be excluded.
    • Employers under common ownership or control that are treated as one large employer under the Internal Revenue Code must combine their counts. So, an employer that does not have 50 or more FTEs may nevertheless be an “ALE member” due to the combined counts of all employers in a controlled group reaching 50 employees.
  • Was the health plan fully insured for one or more months of the calendar year?

 

Step 2: Identify Which Forms the Employer Must Report

Once an employer determines their ALE status and fully insured coverage months, the table below shows how to proceed. The 1095 series forms are individual statements (similar to a W-2), and 1094 series forms are a transmittal cover sheet (similar to a W-3). The 1095 statement goes to the individual, then all completed 1095 forms are e-filed with the IRS with a 1094 transmittal cover by the respective due dates.

Employer

Fully Insured Entire Calendar Year

For One or More Months of the Calendar Year, Health Plan was Level-Funded, Self-Funded or an ICHRA

Due Dates

Non-ALE

Nothing for employer to report. Insurance companies complete 1094/1095-B forms

Employer must complete:

  • 1095-B statements reporting only for months employee and family members were enrolled in the plan when it was not fully insured
  • 1094-B transmittal cover sheet

  • Statements are due to individuals 30 days after January 31 (i.e., Monday 3/3/25), but certain states have their own deadline
  • E-filing is due to the IRS by end of March (i.e., Monday 3/31/25)

ALE

(or ALE member)

Employer must complete:

  • 1095-C statements Parts I and II
  • 1094-C transmittal cover sheet

Employer must complete:

  • 1095-C statements Parts I and II for all FT employees, plus Part III only for months the employee and family members were enrolled in the plan when it was not fully insured.
  • 1094-C transmittal cover sheet
  • Those enrolled who were not a FT employee at any point in the year (such as employees still on COBRA from the prior year) also need statements for coverage months that were not fully insured

  • Statements are due to individuals 30 days after January 31 (i.e., Monday 3/3/25), but certain states have their own deadline
  • E-filing is due to the IRS by end of March (i.e., Monday 3/31/25)

 

Consequences of Non-compliance:

The IRS can assess the penalties listed here for (a). each time the employer failed to provide a correct statement to an individual and (b). for each time the employer failed to file a correct form with the IRS. In other words, the penalty is often double what you see in the IRS’s chart.

For 2025, penalties start at $60 per form if corrected within 30 days, increase to $130 if corrected by August 1, and increase to $330 if not corrected by August 1. However, the penalty can be $660 for employers who intentionally disregard the requirements.

 

Practical Implications for Employers:

Employers typically work with their payroll vendor or HRIS vendor, but many alternatively outsource the ACA reporting to an experienced third-party vendor. It is important to remember these are the employer’s tax forms, so it is imperative to audit the output of the forms and XML file for accuracy prior to filing with the IRS, and save copies in the employer’s records for four years.

 

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Sarah Borders, CEBS

Principal, Benefits Compliance Solutions. Sarah has spent the last 15 years in the employee benefits industry, has numerous designations and serves on NAHU’s Employer Working Group Subcommittee and is an active board member of Austin AHU. She recently stepped down as Vice President of Benefits Compliance at one of the nation's largest brokerage firms to start her own compliance consulting practice. Her designations include an active license with the Texas Department of Insurance, CEBS (Certified Employee Benefits Specialist), Certified Health Care Reform Professional, HIPAA certification and Health Care Service Associate. She holds an MBA from Texas A&M Corpus Christi and a BA from University of Incarnate Word. Her consulting firm, Benefits Compliance Solutions, partners with employers to identify unknown risks and avoid hundreds of thousands of dollars in fines and lawsuits from failure to comply with their healthplan obligations.

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