ACA Reporting Deadlines: Forms 1094-C and 1095-C Explained for Employers

Applicable large employers — those with 50 or more full-time equivalent employees in the prior calendar year — are required to file. The full-time equivalent calculation includes both full-time employees (those averaging 30 or more hours per week) and a calculated equivalent for part-time employees.

Employers who are part of a controlled group or affiliated service group must aggregate their employee counts across all entities in the group to determine ALE status. A company with 35 employees that is part of a controlled group with a 20-employee affiliate is an ALE for purposes of the employer mandate and must file.

Self-insured employers — including self-funded health plans — have additional reporting obligations under Section 6055, which requires reporting of actual coverage provided. For self-insured ALEs, this information is reported on the same Forms 1094-C and 1095-C, using additional indicator codes.

The annual reporting cycle has two key deadlines. The employee furnishing deadline — the date by which employers must provide Form 1095-C to each full-time employee — is typically January 31 of the year following the coverage year, though the IRS has in recent years extended this deadline to early March.

The IRS filing deadline — the date by which employers must file Forms 1094-C and all associated 1095-Cs with the IRS — is March 31 for electronic filers. Employers filing 10 or more returns are required to file electronically. Paper filers have a February 28 deadline, but given the 10-return threshold for electronic filing, most employers of any size will be filing electronically.

Employers should build their internal timeline backward from these deadlines. Gathering the data needed to complete the forms — coverage offers, affordability determinations, enrollment information, and employee hours — takes time, and errors discovered after filing require corrected returns.

Form 1095-C has three parts. Part I identifies the employee and employer. Part II reports the offer of coverage — specifically, whether the employer offered minimum essential coverage that met minimum value and affordability standards, and what the employee's required contribution was for the lowest-cost self-only coverage. Part III, completed only by self-insured employers, reports the months during which the employee and any covered dependents were actually enrolled in coverage.

The indicator codes used in Part II are where most errors occur. There are codes for employees who were offered coverage and enrolled, employees who were offered coverage and declined, employees who were not offered coverage, employees in a waiting period, and various other situations. Selecting the wrong code — or applying codes inconsistently across the employee population — can trigger IRS inquiries and penalty assessments.

Affordability is determined using one of three safe harbors: the W-2 wages safe harbor, the rate of pay safe harbor, or the federal poverty line safe harbor. Employers must apply the safe harbor consistently and document their methodology.

The most common filing errors fall into a few categories. Incorrect or missing Social Security numbers for employees or covered dependents are a frequent issue — the IRS uses SSNs to match 1095-C data to individual tax returns, and missing or incorrect SSNs generate error notices.

Incorrect indicator codes in Part II are another common problem, particularly for employers with variable-hour employees, employees who moved between full-time and part-time status during the year, or employees who were in an initial measurement period.

Late furnishing to employees is a compliance failure that can result in penalties even if the IRS filing is timely. Employers should document the date on which 1095-Cs were mailed or electronically delivered to employees.

Finally, employers who receive IRS Letter 226-J — the initial penalty assessment notice — should not ignore it. The letter provides a response window, and employers who respond with documentation demonstrating that coverage was offered and met the required standards can often reduce or eliminate the proposed penalty. Failing to respond results in the penalty becoming final.

Most employers rely on their TPA, payroll vendor, or a third-party ACA reporting service to compile and file the required forms. This is appropriate — the data requirements are complex and the filing process is technical. But delegation does not eliminate the employer's compliance responsibility.

Employers should review the data their vendor is using before filing, confirm that the affordability calculations are correct, and verify that the indicator codes applied to their employee population are accurate. A vendor error that results in an incorrect filing is the employer's problem, not the vendor's.

Build a relationship with your benefits attorney or compliance advisor so that you have someone to call when you receive an IRS notice or when a rule changes. ACA reporting requirements have been modified several times since the mandate took effect, and staying current requires ongoing attention.