Understanding ACA Reporting: A Complete Guide for Employers

Introduction: What is ACA Reporting and Why Does It Matter?

If you're a business owner or HR professional asking "what is ACA reporting," you're not alone. The Affordable Care Act (ACA), signed into law in 2010, created significant reporting obligations for employers and health coverage providers across the United States. ACA reporting refers to the annual requirement to report health insurance coverage information to the Internal Revenue Service (IRS) and to the individuals covered by or offered that coverage.

Understanding what is ACA reporting is critical because failure to comply can result in substantial penalties. The IRS can assess penalties of $330 per form for failure to file correct information returns, with annual caps reaching $3,987,000 for large employers. Beyond these filing penalties, employers who fail to offer adequate health coverage may face the employer shared responsibility payment (ESRP), which can reach $2,970 per full-time employee annually. These stakes make it essential for every employer to understand their obligations under the ACA.

This comprehensive guide will explain exactly what ACA reporting entails, help you determine whether your company needs to comply, walk you through the reporting process, and show you how to avoid common mistakes and penalties. Whether you're a small business owner trying to understand if the ACA applies to you, an HR director at a large corporation, or a benefits administrator managing compliance for multiple clients, this guide provides the information you need to navigate ACA reporting requirements confidently.

  • Key terms explained: Applicable Large Employer (ALE), Full-Time Equivalent (FTE), Minimum Essential Coverage (MEC)
  • Form requirements covered: Forms 1095-C, 1095-B, 1094-C, and 1094-B
  • Critical deadlines: When to furnish employee copies and file with the IRS
  • Determination tools: How to calculate if your company qualifies as an ALE

What Exactly is ACA Reporting?

The Purpose Behind ACA Reporting Requirements

ACA reporting serves two primary purposes under the Affordable Care Act. First, it helps the IRS enforce the employer shared responsibility provisions (often called the "employer mandate"), which require large employers to offer affordable, minimum value health coverage to full-time employees. Second, it provides the IRS with information to verify that individuals have the health coverage required under the individual mandate (though the federal individual mandate penalty was reduced to $0 starting in 2019, several states maintain their own mandates).

When you hear someone ask "what is ACA reporting," they're typically referring to the annual process of completing and filing IRS Forms 1094 and 1095. These forms document who was offered health coverage, what type of coverage was offered, the cost of that coverage, and which months individuals were actually covered. This information allows the IRS to determine whether employers are meeting their obligations and whether individuals maintained qualifying health coverage.

The Two Main ACA Reporting Pathways

Understanding what is ACA reporting requires knowing that there are two distinct reporting pathways, each with different forms and requirements:

Pathway 1: Employer Reporting (Forms 1094-C and 1095-C)

This pathway applies to Applicable Large Employers (ALEs) - organizations with 50 or more full-time equivalent employees. Under this pathway:

  • Form 1094-C serves as the transmittal form, providing summary information about the employer and the 1095-C forms being submitted
  • Form 1095-C is completed for each full-time employee, documenting the health coverage offered and, for self-insured plans, the months the employee and dependents were covered
  • These forms must be furnished to employees and filed with the IRS annually

Pathway 2: Coverage Provider Reporting (Forms 1094-B and 1095-B)

This pathway applies to health insurance issuers, small self-insured employers (those who are not ALEs), and government-sponsored coverage providers. Under this pathway:

  • Form 1094-B serves as the transmittal form for 1095-B submissions
  • Form 1095-B is completed for each individual covered under the plan, documenting the months of minimum essential coverage
  • These forms must be furnished to covered individuals and filed with the IRS annually

Understanding the difference between 1095-B and 1095-C is essential for determining which forms your organization must file. Many employers are surprised to learn they may need to file under both pathways in certain circumstances.

Who Must Comply with ACA Reporting?

The ACA reporting requirements apply to several categories of organizations. Understanding which category your organization falls into is the first step in determining your compliance obligations:

Organization Type Form(s) Required Filing Requirement
Applicable Large Employers (50+ FTE) with fully-insured plans 1094-C, 1095-C (Parts I and II only) Report offers of coverage to full-time employees
Applicable Large Employers (50+ FTE) with self-insured plans 1094-C, 1095-C (Parts I, II, and III) Report offers of coverage AND actual enrollment
Small self-insured employers (under 50 FTE) 1094-B, 1095-B Report minimum essential coverage provided
Health insurance issuers 1094-B, 1095-B Report coverage for enrolled individuals
Government-sponsored coverage (Medicaid, Medicare, CHIP, TRICARE) 1094-B, 1095-B Report coverage for enrolled individuals

Does My Company Need to Do ACA Reporting?

The Full-Time Equivalent (FTE) Calculation

The most important question when determining "does my company need to do ACA reporting" is whether your organization qualifies as an Applicable Large Employer (ALE). ALE status is determined by your full-time equivalent employee count from the prior year. Here's how the calculation works:

Step 1: Count Full-Time Employees

A full-time employee under the ACA is anyone who works an average of 30 or more hours per week (or 130 hours per month). Count the number of full-time employees you had in each month of the prior year.

Step 2: Calculate Part-Time Employee Equivalents

For part-time employees (those working less than 30 hours per week), add up all their hours worked in each month and divide by 120. This gives you the FTE count for part-time workers. Note: You cannot count more than 120 hours for any single part-time employee per month.

Step 3: Add Full-Time and FTE Counts

Add your full-time employee count to your part-time FTE count for each month. Then average these monthly totals across all 12 months of the prior year.

Step 4: Determine ALE Status

If your average monthly FTE count was 50 or more, you are an Applicable Large Employer and must comply with ACA reporting requirements.

Example FTE Calculation

Consider a company with the following workforce in January:

  • 35 full-time employees (30+ hours/week)
  • 20 part-time employees who worked a combined total of 1,600 hours

The FTE calculation would be:

  • Full-time employees: 35
  • Part-time FTE: 1,600 hours ÷ 120 = 13.33
  • January FTE total: 35 + 13.33 = 48.33

This company would need to complete this calculation for each month and then average all 12 months. If the average is 50 or more, the company is an ALE for the following year.

Special Considerations for ALE Determination

Controlled Groups and Common Ownership

If your company is part of a controlled group (related companies under common ownership), you must aggregate employees across all entities when calculating ALE status. This means multiple smaller companies can collectively become an ALE even if none individually reaches the 50-employee threshold.

Seasonal Workers Exception

If your workforce only exceeds 50 FTEs for 120 days or fewer during the year, AND the employees causing you to exceed 50 are seasonal workers, you may qualify for an exception. Seasonal workers are those who work in positions for which the customary annual employment is six months or less (like agricultural workers or holiday retail staff).

New Employers

If you're a new employer with no prior year to measure, you must determine ALE status based on whether you reasonably expect to employ an average of 50 or more FTEs during the current year.

Small Employers with Self-Insured Plans

Even if your company has fewer than 50 FTEs and doesn't qualify as an ALE, you may still have ACA reporting obligations. If you offer a self-insured health plan (also called a self-funded plan, where the employer pays claims directly rather than purchasing insurance), you must file Forms 1094-B and 1095-B to report the coverage provided to employees and their dependents. This reporting requirement applies regardless of your size.

Understanding the Forms: 1095-C vs. 1095-B

Form 1095-C: The Employer Coverage Report

Form 1095-C is the primary form used by Applicable Large Employers to document health coverage offers and enrollment. The form has three parts:

Part I: Employee and Employer Information

  • Employee's name, address, and Social Security Number
  • Employer's name, EIN, address, and contact information
  • Plan start month (the month eligibility typically begins)

Part II: Employee Offer and Coverage

This is the most complex part of the form, requiring specific codes for each month. Understanding the Line 14, 15, and 16 codes is essential:

  • Line 14 (Offer of Coverage): Codes indicating what type of coverage was offered (1A through 1T)
  • Line 15 (Employee Share of Monthly Premium): The monthly cost to the employee for the lowest-cost self-only coverage
  • Line 16 (Safe Harbor and Other Codes): Codes explaining why coverage wasn't offered or why it's deemed affordable

Part III: Covered Individuals (Self-Insured Plans Only)

If the employer offers a self-insured plan, Part III lists all individuals enrolled in coverage:

  • Name and SSN of each covered individual (employee and dependents)
  • Months during which each individual was covered
  • Date of birth (if SSN is not available)

Form 1095-B: The Coverage Provider Report

Form 1095-B is used by health insurance issuers, small self-insured employers, and government programs to document minimum essential coverage. The form includes:

Part I: Responsible Individual

  • Name, address, and SSN of the primary person responsible for the policy

Part II: Employer-Sponsored Coverage

  • Employer information (if coverage is through an employer)

Part III: Issuer or Coverage Provider

  • Name, EIN, and contact information of the insurance company or coverage provider

Part IV: Covered Individuals

  • Name, SSN, and months of coverage for each covered person

ACA Reporting Deadlines: When Are Forms Due?

Key Deadlines for Tax Year 2025 (Filed in 2026)

Understanding ACA deadlines is crucial for avoiding late filing penalties. Here are the key dates:

Deadline Requirement Applicable Forms
March 3, 2026 Furnish copies to employees and covered individuals 1095-C and 1095-B recipient copies
February 28, 2026 Paper filing with IRS (if filing fewer than 10 forms) 1094-C/1095-C and 1094-B/1095-B
March 31, 2026 Electronic filing with IRS 1094-C/1095-C and 1094-B/1095-B

The IRS has maintained the extended furnishing deadline (March 3 instead of January 31) for recent tax years, giving employers additional time to prepare and distribute recipient copies. However, this extension is granted on a year-by-year basis, so employers should monitor IRS announcements each fall.

Electronic Filing Mandate

The IRS now requires electronic filing for organizations submitting 10 or more information returns of any type. This threshold was significantly reduced from 250 forms in prior years. For ACA reporting purposes, this means virtually all Applicable Large Employers must e-file through the IRS Affordable Care Act Information Returns (AIR) system. Paper filing is only available for organizations filing fewer than 10 total information returns.

State Filing Deadlines

Several states have enacted their own health insurance mandates requiring separate ACA-style reporting:

  • California: Requires state filing typically by March 31
  • New Jersey: Requires NJ-1095 reporting with deadlines aligned to federal dates
  • Rhode Island: Requires state ACA reporting with similar deadlines
  • District of Columbia: Has unique filing requirements for D.C. residents
  • Massachusetts: Maintains its own 1099-HC reporting system

If you have employees in these states, you must file both federal ACA forms and the applicable state forms to remain compliant.

The ACA Reporting Process Step-by-Step

Step 1: Determine Your Filing Obligations

Before beginning the reporting process, confirm:

  • Your ALE status based on prior year FTE calculations
  • Whether you have a fully-insured or self-insured health plan
  • Which forms you need to file (1095-C, 1095-B, or both)
  • Whether any controlled group aggregation rules apply
  • Which states require separate filings based on employee locations

Step 2: Gather Required Data

Collect the necessary information for each employee or covered individual:

  • Employee/individual information: Full legal name, Social Security Number, current mailing address
  • Employment data: Months of employment, full-time status by month, date of hire and termination (if applicable)
  • Coverage offer information: Months coverage was offered, type of coverage offered, employee's required premium contribution
  • Enrollment data (self-insured plans): Months each individual was actually enrolled, dependent information including names, SSNs, and covered months
  • Safe harbor information: Any applicable safe harbors for determining affordability

Step 3: Complete the Forms

Using ACA reporting software or the IRS downloadable forms:

  • Enter all employee and coverage information accurately
  • Select appropriate Line 14, 15, and 16 codes for each month on Form 1095-C
  • Verify that code combinations are valid and consistent
  • Complete Form 1094-C transmittal with summary information
  • For 1095-B filers, document all covered individuals and coverage months

Step 4: Validate Your Data

Before submitting, thoroughly validate your forms:

  • Verify SSN format and accuracy for all individuals
  • Confirm name/SSN combinations match IRS records
  • Check that code combinations on 1095-C are logically consistent
  • Ensure no required fields are missing
  • Verify premium amounts fall within reasonable ranges

Step 5: Distribute Employee/Individual Copies

By the furnishing deadline:

  • Mail physical copies to each employee or covered individual
  • Or provide electronic copies to those who have consented (IRS requires affirmative consent for electronic delivery)
  • Retain documentation of distribution for your records

Step 6: File with the IRS

Submit your forms to the IRS:

  • Electronic filing (required for 10+ forms): Submit through the AIR system using approved software or a third-party transmitter like BoomTax
  • Paper filing (fewer than 10 forms): Mail to the IRS address specified in the form instructions
  • Monitor for acceptance or rejection notices
  • Address any errors promptly with corrected filings

Step 7: Complete State Filings

If you have employees in mandate states:

  • Prepare state-specific forms using the same underlying data
  • Submit to each applicable state by their deadlines
  • Confirm acceptance from state agencies

Common ACA Reporting Mistakes and How to Avoid Them

Mistake 1: Incorrect FTE Calculation

Many employers miscalculate their FTE count, either incorrectly concluding they're not an ALE (and failing to file) or incorrectly assuming they are (and filing unnecessary forms). To avoid this:

  • Include all hours worked, not just regular scheduled hours
  • Account for overtime and paid leave
  • Don't forget to aggregate controlled group entities
  • Document your calculation methodology for audit purposes

Mistake 2: Incorrect or Missing Code Combinations

The Line 14, 15, and 16 codes on Form 1095-C must work together logically. Common errors include:

  • Using code 1A (qualifying offer to employee, spouse, and dependents) when coverage wasn't actually offered to all three
  • Leaving Line 16 blank when coverage wasn't offered and a code is required
  • Using incompatible combinations (like offer code 1H with a safe harbor code)
  • Failing to change codes when employee status changed mid-year

Mistake 3: SSN Errors and Mismatches

Social Security Number issues are a leading cause of IRS rejections and follow-up notices:

  • Transposed digits in SSNs
  • Name/SSN combinations that don't match IRS records
  • Missing SSNs for covered dependents
  • Using ITINs when SSNs are required

Mistake 4: Missing State Filings

Employers often focus on federal compliance and overlook state requirements. If you have even one employee residing in California, New Jersey, Rhode Island, D.C., or Massachusetts, you likely have state filing obligations in addition to federal requirements.

Mistake 5: Late or Missed Deadlines

Even with good intentions, many employers file late or miss deadlines entirely:

  • Set calendar reminders well before each deadline
  • Begin data preparation in Q4, not January
  • Test your ACA software and processes before the deadline crunch
  • Have a backup plan if technical issues arise

ACA Reporting Penalties: What's at Stake

Information Return Penalties

The IRS imposes penalties for failure to file correct ACA information returns. For tax year 2025 (filed in 2026), the penalty amounts are:

Violation Type Penalty per Form Annual Maximum
Filed within 30 days of deadline $60 $664,500
Filed more than 30 days late but by August 1 $130 $1,993,500
Filed after August 1 or not at all $330 $3,987,000
Intentional disregard $660 (minimum) No cap

These penalties apply separately for failure to file with the IRS and failure to furnish statements to recipients. A company that misses both deadlines faces double penalties.

Employer Shared Responsibility Penalties

Beyond filing penalties, ALEs face significant penalties under IRC Section 4980H if they fail to offer adequate health coverage:

Section 4980H(a) Penalty: If an ALE fails to offer minimum essential coverage to at least 95% of full-time employees (and their dependents), and at least one full-time employee receives a premium tax credit for marketplace coverage, the penalty is $2,970 per full-time employee per year (minus the first 30 employees).

Section 4980H(b) Penalty: If an ALE offers coverage but it's not affordable or doesn't provide minimum value, the penalty is $4,460 per employee who receives a premium tax credit (no reduction for first 30 employees).

How Accurate ACA Reporting Protects You

Accurate ACA reporting is your primary defense against 4980H penalties. The forms you file demonstrate to the IRS that you:

  • Offered qualifying coverage to the required percentage of employees
  • Made coverage affordable based on safe harbor calculations
  • Provided minimum value coverage

Without proper documentation through ACA reporting, you cannot effectively dispute IRS penalty assessments.

Frequently Asked Questions About ACA Reporting

What is ACA reporting and who needs to do it?

ACA reporting is the annual requirement to report health insurance information to the IRS under the Affordable Care Act. Applicable Large Employers (50+ full-time equivalent employees) must file Forms 1094-C and 1095-C. Additionally, health insurance issuers, small self-insured employers, and government coverage providers must file Forms 1094-B and 1095-B. The reporting documents coverage offers, actual enrollment, and helps the IRS enforce employer mandate compliance.

How do I know if my company is an Applicable Large Employer?

Calculate your full-time equivalent (FTE) employee count from the prior year. Count all employees working 30+ hours per week as full-time. For part-time employees, add total hours worked monthly and divide by 120 to get FTE equivalents. If your average monthly FTE across all 12 months equals 50 or more, your company is an ALE. Remember to aggregate employees across all companies under common ownership when making this calculation.

What's the difference between Form 1095-B and Form 1095-C?

Form 1095-C is filed by Applicable Large Employers to report coverage offered to full-time employees, including coverage details and affordability information. Form 1095-B is filed by insurance companies, small self-insured employers (under 50 FTE), and government programs to report minimum essential coverage enrollment. Some self-insured ALEs may need to complete parts of both the 1095-C (Part III) and understand 1095-B for comparison. See our detailed 1095-B vs 1095-C guide for more information.

When are ACA forms due to employees and the IRS?

For tax year 2025 (filed in 2026), employee/recipient copies must be furnished by March 3, 2026. The IRS e-filing deadline is March 31, 2026. Paper filings (only allowed for fewer than 10 forms) are due February 28, 2026. State deadlines vary but generally align with federal dates. The IRS has consistently extended the employee furnishing deadline in recent years, but this extension isn't guaranteed annually.

What happens if I miss the ACA reporting deadline?

Late filing triggers automatic penalties. If filed within 30 days of the deadline, penalties are $60 per form. Filed more than 30 days late but by August 1, penalties increase to $130 per form. After August 1 or not filed at all, penalties reach $330 per form with annual caps near $4 million. Separate penalties apply for failure to furnish employee copies. Intentional disregard of requirements removes penalty caps entirely.

Do I need ACA reporting software, or can I file myself?

While you can technically file ACA forms yourself, using dedicated ACA reporting software is strongly recommended for all but the smallest employers. Software handles complex validation, generates proper XML files for AIR transmission, manages employee distribution, and provides error checking that catches mistakes before filing. The time savings and reduced error risk typically far outweigh software costs, especially considering potential penalties for incorrect filings.

What if I made a mistake on forms I already filed?

If you discover errors after filing, you must file corrected ACA forms. Generate a new 1095-C or 1095-B with the "Corrected" checkbox marked, correct the erroneous information, and submit through the AIR system. Also file a corrected 1094-C or 1094-B transmittal. Provide corrected copies to affected employees. Filing corrections promptly demonstrates good faith effort at compliance and may reduce penalties.

Does my small business need to do ACA reporting?

If your small business has fewer than 50 full-time equivalent employees, you generally don't have ACA reporting obligations unless you offer a self-insured health plan. Small self-insured employers must file Forms 1094-B and 1095-B regardless of size. Fully-insured small employers typically have no ACA filing requirements because their insurance company handles 1095-B filing. However, always verify your FTE count carefully, including any aggregation with related businesses.

What states have their own ACA reporting requirements?

Currently, California, New Jersey, Rhode Island, the District of Columbia, and Massachusetts have individual health insurance mandates requiring state-level reporting. If you have employees residing in these states, you must file with both the IRS and the applicable state(s). Requirements and deadlines vary by state. Using BoomTax or similar software that supports all state filings simplifies compliance for multi-state employers.

Can I outsource ACA reporting to a third party?

Yes, many employers outsource ACA reporting to third-party providers, payroll companies, or TPAs. While you can delegate the filing work, the employer remains ultimately responsible for accuracy and timeliness. Choose a provider with a strong track record, appropriate security certifications (SOC 2, HIPAA), and the ability to handle corrections. Verify they're an IRS-authorized AIR transmitter and support any required state filings.

What is an ICHRA and how does it affect ACA reporting?

An Individual Coverage Health Reimbursement Arrangement (ICHRA) allows employers to reimburse employees for individual health insurance premiums. ICHRA reporting on ACA forms requires specific codes and considerations. Employees who decline ICHRA may be eligible for marketplace subsidies, affecting the employer's potential penalty exposure. If you offer an ICHRA, work with an experienced ACA software provider to ensure forms are completed correctly.

How long must I retain ACA forms and records?

The IRS recommends keeping ACA forms and supporting documentation for at least seven years. This includes copies of all filed forms, proof of employee distributions (mailing receipts, electronic delivery confirmations), underlying data used to complete forms, FTE calculations, and any corrections filed. Some employers retain records longer for audit protection. Store records securely given the sensitive personal information involved.

How BoomTax Simplifies ACA Reporting

Now that you understand what is ACA reporting and whether your company needs to comply, the next question is how to actually get it done efficiently and accurately. BoomTax provides a comprehensive ACA reporting solution designed to simplify compliance for employers of all sizes:

  • No TCC required: BoomTax transmits directly to the IRS AIR system as an authorized provider, eliminating the need for you to apply for your own Transmitter Control Code
  • Comprehensive validation: The platform validates your data against hundreds of IRS rules before submission, catching errors that would otherwise result in rejections or penalties
  • All forms supported: File 1095-C, 1095-B, 1094-C, and 1094-B from one unified platform
  • State filing support: Handle California, New Jersey, Rhode Island, D.C., and Massachusetts filings without separate systems
  • Bulk data import: Upload data from Excel, CSV, or integrate directly with payroll systems like ADP, Workday, and UKG
  • Employee distribution: Print and mail services deliver forms to employees with tracking, or enable secure electronic delivery for consenting employees
  • Unlimited corrections: Fix mistakes without additional charges, ensuring you can maintain compliance even when errors are discovered late
  • Multi-EIN support: Manage ACA reporting for multiple employer entities or clients from a single account

BoomTax's pay-per-form pricing means you only pay for what you file, with no subscription fees or platform charges. This makes it cost-effective for employers with hundreds or thousands of employees, as well as TPAs managing compliance for multiple clients.

Ready to simplify your ACA reporting? Get started with BoomTax today and experience stress-free compliance.

Conclusion: Taking Control of Your ACA Compliance

Understanding what is ACA reporting is the first step toward ensuring your organization remains compliant with Affordable Care Act requirements. Whether you're an Applicable Large Employer required to file Forms 1094-C and 1095-C, a small self-insured employer filing 1094-B and 1095-B, or somewhere in between, the key takeaways are clear:

  • Know your status: Calculate your FTE count accurately, including controlled group aggregation, to determine if you're an ALE
  • Understand your forms: Know which forms apply to your situation and what information they require
  • Meet your deadlines: Mark furnishing and filing deadlines on your calendar and begin preparation early
  • Validate thoroughly: Check data accuracy before submission to avoid rejections and penalties
  • Don't forget states: File with California, New Jersey, and other mandate states if you have employees there
  • Use the right tools: Invest in quality ACA reporting software to streamline the process and reduce errors

The penalties for non-compliance are substantial, but with proper planning and the right resources, ACA reporting doesn't have to be overwhelming. By starting early, gathering accurate data, and using a trusted filing solution like BoomTax, you can meet your obligations efficiently and focus on what matters most—running your business.

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