ACA Reporting Requirements Every Employer Should Know

By the time most employers think about ACA reporting, the hard part is already done. The forms due early next year are built from a full year of payroll data: hours worked, coverage offered, enrollments, and terminations. By October, most of that data for 2026 already exists. 

That matters because ACA reporting is more than a filing. The IRS uses these forms to decide whether an employer owes a penalty. Here's what employers need to know about the requirements, what changed recently, and where mistakes tend to happen.

Who Has to File and What Gets Reported 

ACA reporting applies to Applicable Large Employers (ALEs): businesses that averaged 50 or more full-time employees, including full-time equivalents, during the prior year. Under the ACA, a full-time employee is anyone who averages at least 30 hours of work per week, or 130 hours in a calendar month. Part-time hours count toward that total, and related companies under common ownership may be counted together. The IRS ALE Information Center explains how the calculation works. 

Self-insured (self-funded) employers have to report regardless of ALE status. A company with 28 employees and a self-funded health plan, for example, still has to comply with ACA reporting rules. Self-insured employers below the ALE threshold report that coverage on Forms 1094-B and 1095-B instead. 

ALEs file two forms: 

• Form 1094-C, a transmittal that summarizes the employer's information for the IRS. 
• Form 1095-C, filed for each full-time employee, showing month by month what coverage was offered and whether the employee enrolled. 

The IRS uses these forms to check whether employers met the ACA's coverage requirements and whether employees qualify for premium tax credits through the Marketplace. 

Key Dates for the 2026 Reporting Year 

ACA forms come due early in the year, often while teams are still closing out W-2s. For 2025 coverage, employers had until March 2, 2026, to furnish forms to employees (or post a notice that forms are available on request) and until March 31, 2026, to file electronically with the IRS. Expect a similar schedule for 2026 coverage in early 2027. 

Electronic filing is required for any employer filing 10 or more information returns in total, including W-2s and 1099s. For virtually every ALE, that means e-filing. 

What Changed Recently, and What Didn't 

Two federal laws signed in December 2024 eased parts of the reporting process: 

• Employee copies on request. Employers can now furnish Form 1095-C only when an employee asks, as long as they post a clear, accessible notice. Requests must be filled by January 31 or within 30 days, whichever is later. 
• More time to respond. Employers now have 90 days, up from 30, to respond to Letter 226-J, the IRS notice that proposes an ACA penalty. 
• A six-year window. The IRS has six years to assess employer mandate penalties, so a reporting error can surface long after the forms are filed. 

What didn't change: ALEs still file every form with the IRS. Some states also require employers to send forms to employees, so multi-state employers should check before relying on the on-request option. 

What's at Stake When Reporting Goes Wrong 

ACA reporting errors can lead to two kinds of penalties. 

Reporting penalties 

Filing late, filing incorrect information, or failing to furnish a requested form can each trigger a penalty per form. For forms due in 2026, the late-filing penalty was $340 per form, and the IRS copy and employee copy count separately. Penalties for intentional disregard are higher and have no annual cap. 

Employer mandate penalties 

For 2026, an ALE that doesn't offer coverage to at least 95% of full-time employees can owe $3,340 per full-time employee, minus the first 30. An ALE whose coverage isn't affordable or doesn't meet minimum value can owe $5,010 for each affected employee (Rev. Proc. 2025-26). Either penalty applies only when a full-time employee receives a premium tax credit through the Marketplace. For 2026, coverage is affordable if the employee's share of self-only coverage stays at or below 9.96% of household income (Rev. Proc. 2025-25). 

Consider an employer with 80 full-time employees that misses the 95% threshold for a full year. The potential penalty is (80 − 30) × $3,340, or $167,000. 

Where mistakes happen 

The IRS reads the codes on Form 1095-C to decide whether to propose a penalty. An employer that offered compliant coverage can still receive a penalty letter if its forms say otherwise. Common trouble spots include: 

• A growing business crosses the 50-employee threshold without realizing it. 
• Coverage was offered, but the codes on the form don't show it. 
• A variable-hour employee becomes full-time under the measurement rules and never receives an offer. 
• Employees who left mid-year are left off or reported incorrectly. 

What to Review Before Year-End 

The fourth quarter is the best time to catch problems while there's still time to fix them: 

• Confirm whether your business is an ALE, including any related entities. 
• Review hours for part-time, seasonal, and variable-hour employees. 
• Check that your lowest-cost, self-only plan meets the 2026 affordability threshold under the safe harbor you use. 
• Reconcile enrollments, waivers, and terminations against payroll records. 
• Decide how you'll furnish employee copies and, if you use the on-request option, where your notice will be posted. 

Get Ahead of Next Year's Filing 

ACA reporting rewards preparation. The smoothest filing seasons belong to employers whose payroll, hours, and benefits data are already accurate when the forms are built. 

That's easier with a partner who already manages the underlying data. Future Systems determines ALE status using the payroll data in its system, analyzes employee eligibility, tracks inactive employees, and prepares and electronically files Forms 1094-C and 1095-C. If questions come up before filing, you'll hear from a real person. 

Quick Tip: ACA deadlines come fast, and the data behind them is built all year. Learn more about Future Systems' ACA Reporting services, or contact Future Systems today to learn which solution is the right fit for your organization.