ACA reporting requirements: A guide for businesses

As a US-based business, you may be required to comply with the ACA’s reporting requirements every year.

However, these requirements can be complex, especially if you’ve never done it before. Who needs to comply? What forms need to be filed? And what are the deadlines? 

In this guide, we’ll cover everything your business needs to know about ACA reporting, and help ensure that you avoid any mistakes.

What is the ACA — and why do businesses need to report?

The Affordable Care Act (ACA) — also known as "Obamacare" — is a comprehensive healthcare reform that was enacted in 2010. It is designed to:

• Expand access to health insurance for US citizens

• Improve quality of care

• Reduce healthcare costs

To ensure that eligible businesses comply with the law’s provisions, the federal government imposes certain reporting requirements.

What is the current status of the ACA? 

After attempts to “repeal and replace” the ACA, the Individual Mandate (one of the key offerings of the ACA) was removed in 2019. All the other provisions remain intact. 

During the COVID-19 pandemic, certain ACA reporting requirements were relaxed. However, this was a temporary measure, and businesses are expected to comply fully moving forward.

Who needs to comply?

The ACA can affect businesses of all sizes. However, reporting responsibilities primarily fall on two types of company: applicable large employers (ALEs), and businesses who provide minimum essential coverage (MEC).

ALEs

An ALE is an employer that has employed at least 50 full-time employees (or full-time equivalent (FTE) employees) in the previous year.

When calculating this criteria, you must also take your part-time employees into account.

For instance, if you have 40 full-time employees (i.e., those who work at least 30 hours per week) and 30 part-time employees, you might think you’re under the threshold.

However, your part-time employees must be converted into FTEs. To do this:

1. Calculate the total hours worked by all your part-time employees in a month (up to a maximum of 120 hours per employee)

2. Divide this figure by 120

3. Add this to your number of full-time employees

In our example, let’s say your part-time employees work 20 hours per week, or 80 hours per month. For the first step, this would give you:

• 30 x 80 = 2,400 hours per month

For step two, you’d calculate:

• 2,400 / 120 = 20

This would give you 20 FTEs. When you add this to your number of full-time employees (40), you would have 60 full-time employees and FTEs. As a result, you would be classed as an ALE, and required to report.

MEC providers

Businesses that provide MEC must also comply with ACA reporting. These can include:

• Employers that provide a self-funded health coverage plan (i.e., self-insured)

• Any other organization that provides minimum essential coverage, such as union-sponsored health plans

What is MEC? 

MEC refers to the minimum standards a health plan must meet under the ACA's individual shared responsibility provision. Under these standards, health plans must:

• Be affordable based on employee premium costs. Under this definition, the employee’s contribution cannot exceed a set amount of their household income. As of 2024, this amount is 8.39%.

• Provide a minimum value. This provision requires employer health plans to cover at least 60% of the total allowed costs of covered services.

Health plans that qualify as MEC include:

• Employer-sponsored group health plans

• Individual market policies

• Medicare and Medicaid

• TRICARE and other government-sponsored plans

• Other types of coverage as defined by the federal government

What do you need to report? 

Eligible employers must report certain information about the health coverage they offer to employees to comply with the ACA. This includes the following employee data:

• Full name, address, and tax ID number

• Employment status 

• Social Security number

• Number of months employed as a full-time employee

• Monthly hours of service

You must also provide key health plan details, such as the name, address, and Employer Identification Number (EIN) of the health plan provider. Additionally, you must report whether you offer a self-insured or fully insured plan.

In addition to individual employee information, you must also report the size and composition of your workforce. This includes the total number of full-time and FTE employees for each month of the year. 

Finally, there are also certain tax code reporting requirements: 

• The cost of employer-sponsored group health plan coverage must be reported. This allows the Internal Revenue Service (IRS) to determine whether an employee may be liable for an individual shared-responsibility payment. It also provides information for the administration of tax provisions. 

• The amount reported should include both the employer and employee portions of the health plan cost.

Which ACA form(s) do you need to submit?

The main forms required for ACA reporting are as follows:

Form 1095-C

Who is it for: Self-insured and fully insured employers

This form reports employer-provided health insurance coverage information. It is issued by ALEs to full-time employees (and also applies to part-time employees if they enroll in employer-sponsored coverage).

A copy must be provided to all employees.

Form 1094-C

Who is it for: Self-insured and fully insured ALEs 

This form Is used to transmit 1095-C forms to the IRS.

Form 1095-B

Who is it for: Small employers (those with fewer than 50 full-time employees and FTEs) if they offer self-insured plans and aren’t subject to ESR provisions.

This form is used to report the MEC provided to an individual during the tax year. It applies to both full-time and part-time employees if they enroll in the insurance plan.

A copy must be provided to all employees.

Form 1094-B

Who is it for: Small employers that offer self-insured health plans.

This form is used to transmit 1095-B forms to the IRS. It applies to full-time and part-time employees.

Form W-2

Where applicable, employers must also report health plan costs on IRS Form W-2 (specifically Box 12, Code DD).

When are the reporting deadlines? 

The reporting timelines for ALEs are as follows:

• You must provide Forms 1095-B and 1095-C to your full-time employees by March 1 each year

• You must submit Forms 1095-B and 1095-C (and their copies) to the IRS by February 28 (or April 1 if filing electronically) each year

If you are submitting 10 or more forms, you must file electronically. 

Note that, while these deadlines are standard, minor variations can occur from year to year. You should refer to the most recent IRS updates to maintain strict compliance with the specific deadlines for that tax year.

What are the penalties for not reporting? 

The IRS has recently increased enforcement and auditing efforts around ACA compliance. As part of these efforts, it has been sending penalties (through ‌Letter 226J) to employers that don’t comply. The IRS has also recently introduced an automated ACA compliance validation system (ACV), to identify cases of non-compliance based on yearly ACA filings. 

Specifically, companies can be penalized for:

• Not filing the required forms by their respective deadlines

• Not furnishing copies of the required forms to covered employees on time

• Submitting forms with errors

The penalties for late filing are as follows:

ACA reporting best practices

To provide a smooth and compliant ACA reporting process, here are some tips and best practices:

Gather accurate employee data

It's important that the employee data you use for ACA reporting is up to date. This includes names, Social Security numbers, and dates of birth. Incomplete data can result in reporting errors and potential penalties. When you partner with Remote, it’s quick and easy to manage all your employee data in one centralized location.

Use electronic filing for faster processing

Electronic filing is the preferred method for submitting ACA reporting forms to the IRS. It's faster and more efficient than paper filing, and it also reduces the risk of errors.

Maintain records of all submitted forms

It's important to keep records of all ACA reporting forms you submit to the IRS, as well as any correspondence related to the forms. This can help you track your compliance requirements and respond to any questions that may arise later.

Stay up-to-date on any changes to ACA reporting rules and requirements 

The ACA reporting rules and requirements can change from year to year, so it's important to stay informed about any updates. Remote ensures that you are fully up to date, and that you are made aware of any upcoming changes.

Don’t miss deadlines

Adhere to the deadlines for filing ACA reporting forms with the IRS and furnishing forms to employees. Again, Remote can help ensure that you are fully aware of all relevant deadlines, and that you file on time.

Simplify your ACA reporting with Remote 

With so many reporting requirements to be aware of, it can be a challenge to decipher what your ACA reporting obligations are — or even if you’re required to report at all.

Remote can remove all these headaches and ensure that you’re fully compliant not just with the ACA, but with all tax filing and reporting requirements. Our experts stay abreast of all changes and updates, while our Payroll platform automates complex calculations and ensures that you are always compliant with any applicable regulations.

To learn more about how we can simplify your payroll responsibilities, speak to one of our friendly experts today!

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