The Affordable Care Act (ACA) mandates annual reporting each March under Internal Revenue Code sections 6055 and 6056. This works similarly 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 a 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 Applicable Large Employer (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 for a non-ALE for the calendar year 2025 who sponsored a self-insured or level-funded medical plan or an ICHRA.
Complying with Reporting Requirements
Employers required to submit ACA Reporting must comply with all the reporting requirements and deadlines to avoid filing penalties. Failing to file electronically can also incur separate penalties.
March 2: Form 1095 individual statements must be provided to individuals. Alternatively, the employer can provide language on its public website by March 2, providing instructions to request a copy of the 1095 form, and then only provide a 1095 to the individual within 30 days of request. The main webpage should provide a conspicuous link to “Tax Information,” which takes them to a page with the following:
- A statement, in capital letters, “IMPORTANT HEALTH COVERAGE TAX DOCUMENTS”
- Explains how individuals may request a copy of Form 1095
- Includes the employer’s email address, mailing address, and telephone number
March 31: All 1095 forms must be electronically filed with a 1094 transmittal cover sheet to the IRS via an XML file on the IRS’s AIR platform (ACA Information Returns).
- State requirements/deadlines may be different in CA, DC, MA, NJ, and RI.
- 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.
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 on 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 for all 12 months of the calendar year are exempt from reporting. So, non-ALEs without exception need to ensure they fully comply with the 1094-B and 1095-B reporting requirements and provide proper website notice.