ACA reporting refers to the 1095 and 1094 forms that employers need to send to the IRS on an annual basis. These reports are required to comply with the Affordable Care Act (ACA).
Also known as the Patient Protection and Affordable Care Act. The IRS requires Applicable Large Employers (ALEs) employers to send ACA reports to ensure compliance with the ACA regulations. ALEs are employers with 50 or more full-time or full-time equivalent employees. All ALEs must comply with ACA reporting.
The ALE Affordability Calculator is a user-friendly tool that simplifies the complex process of determining the affordability of employer-sponsored health coverage and designed to assist large employers in accurately calculating their minimum required employer contribution under the ACA.
Our easy-to-use ALE Affordability Calculator.
Under the Affordable Care Act (ACA), certain employers and insurance providers must report health coverage information to the IRS.
Here are the key points:
1. Who Needs to Report:
- Applicable Large Employers (ALEs): Employers with 50 or more full-time employees, including full-time equivalents.
- Insurance Providers: Health insurance issuers, self-insured employers, government agencies, and other providers of minimum essential coverage.
- Form 1095-C: Used by ALEs to report information about offers of health coverage and enrollment in health coverage for their employees.
- Form 1095-B: Used by insurance providers to report information about individuals who are covered by minimum essential coverage.
- Employee Statements: Must be provided to employees by January 31st.
- IRS Filing: Paper filings are due by February 28th, and electronic filings are due by March 31st.
- Failure to file correct information returns or provide correct payee statements may Non-compliance with ACA reporting requirements can result in significant penalties. Here are the main types of penalties:
Failure to File Correct Information Returns (Forms 1094-C and 1095-C):
- Penalty Amount: $290 per return for the 2023 tax year1.
- Increased Penalty: If the failure continues after August 1st, the penalty increases1.
- Penalty Amount: Similar to the failure to file, this can also result in a $290 penalty per statement1.
Due to be Filed/Furnished Year ACA Returns |
Not more than 30 days late | 31 days late until August 1 |
After August 1 |
---|---|---|---|
2025 | $60 per return or statement – $232,500* maximum $664,500^ maximum |
$130 per return or statement – $664,500* maximum $1,993,500^ maximum |
$330 per return or statement – $1,329,000* maximum $3,987,000^ maximum |
2024 | $60 per return or statement – $220,500* maximum $630,500^ maximum |
$120 per return or statement –
$630,500* maximum $1,891,500^ maximum
|
$310 per return or statement – $1,261,000* maximum $3,783,000^ maximum |
2023 | $50 per return or statement – $206,000* maximum $588,500^ maximum |
$110 per return or statement – $588,500*maximum $1,766,000^ maximum |
$290 per return or statement – 1,177,500* maximum $3,532,500^ maximum |
- 4980H(a) Penalty: For not offering minimum essential coverage to at least 95% of full-time employees and their dependents.
For the 2025 calendar year, the adjusted penalty amount under Code § 4980H(a) is $2,900 per full-time employee (less the 30-employee reduction).
- 4980H(b) Penalty: For offering coverage that is either unaffordable or does not provide minimum value.
For the 2025 calendar year, the adjusted penalty amount under Code § 4980H(b) is $4,350 per full-time employee who receives subsidized coverage through an Exchange.
These figures are a $70 decrease and a $110 decrease over the 2024 figures, respectively.
These penalties can add up quickly, especially for larger employers, so it’s crucial to ensure compliance with ACA reporting requirements. See the recording of our presentation on this subject here.
Warner Vendor Partners can provide great assistance for Applicable Large Employers who need help with this process.
We are here to help you with any compliance questions you have.
Measurement periods are used by employers to determine which employees are considered full-time under the ACA. This is important because the ACA requires Applicable Large Employers (ALEs) to offer health insurance to full-time employees (those working an average of at least 30 hours per week) and their dependents, or face potential penalties1.
For workers who have fluctuating hours, determining full time status can be challenging. For these employers, using the look-back method for measuring full time status can ensure that full time employee counts are correct and that coverage is offered to the correct group of employees.
1. Look-Back Measurement Method:
- How It Works: Employers use a defined period (the measurement period) to track and average an employee’s hours of service to determine their full-time status for a subsequent stability period.
- Pros: Provides more stability and predictability for employees with variable hours.
- Cons: More complex to administer2.
1. Measurement Period:
- Definition: A period of time (between 3 to 12 months) during which an employer tracks an employee’s hours to determine if they average at least 30 hours per week.
- Types:
- Initial Measurement Period: Used for new hires.
- Standard Measurement Period: Used for ongoing employees3.
- Definition: A short period (up to 90 days) after the measurement period, during which the employer can analyze the data and notify employees of their status.
- Purpose: Allows time for administrative tasks without affecting the stability period2.
- Definition: A period (at least 6 months and no shorter than the measurement period) during which employees who were determined to be full-time during the measurement period must be treated as full-time, regardless of their actual hours worked.
- Purpose: Provides consistency and predictability for both employers and employees3.
- Predictability: Helps employers manage and predict their health insurance obligations.
- Flexibility: Allows employers to accommodate employees with variable work schedules.
- Compliance: Ensures that employers meet ACA requirements and avoid penalties1.
Measurement periods are essential for ACA compliance, helping employers determine which employees qualify as full-time and ensuring that they offer the necessary health coverage. For employers with employees who work variable hours or who have high turnover, a measurement period ensures accuracy and ensures that an employer is offering coverage only to actual full time employees. By using either the monthly measurement method or the look-back measurement method, employers can effectively manage their workforce and meet their legal obligations.