The Ultimate Guide to ACA Reporting Requirements

Globalization of the workforce has benefited businesses with the free movement but also impacted labor policies mandating employee health and social security welfare. 

One such policy mandate is ACA reporting requirements for US employers.

The Affordable Care Act (ACA) has rules about what kind of health insurance companies must offer—essential health benefits, preventive services, etc. 

Moreover, ACA reporting is how the government ensures those rules are followed. 

Here's a simple breakdown of what ACA reporting involves:

• You must file for compliance if you employ more than 50 full-time employees.  
• You must collect information about their employees' health insurance coverage and send it to the government. 

ACA filings are essential for the government to track the number of people with health insurance and whether they comply with the ACA rules. 

In this blog, you will get detailed answers to questions about what is ACA reporting and what is ACA filing, including best practices for compliance and how investing in a dedicated compliance solution can streamline ACA reporting requirements.

What is ACA Reporting?

ACA reporting refers to the legal requirement under the Affordable Care Act (ACA) for Applicable Large Employers (ALEs) to report information about the health coverage of full-time employees (or equivalents) to the Internal Revenue Service (IRS). 

ACA reporting requirements oblige you to follow an IRS-mandated checklist to ensure transparency in employee health coverage. 

Who is Required to Comply with ACA Reporting?

ACA compliance reporting is your way of proving to the IRS that you’re offering employee health under the Affordable Care Act rules. Let’s look at situations when you’re required to overcome this compliance challenge: 

Applicable large employer (ALE)

If you employ more than 50 full-time employees (or equivalents) in a financial year, you are deemed an Applicable Large Employer (ALE). ACA ale requirements include: 

• Minimum essential coverage (MEC) for at least 95% of your full-time employees and their dependents.
• MEC must meet affordability standards, i.e., cover at least 60% of the total allowed cost of benefits. 

ACA reporting requirements for small employers

Further, small employers (employing less than 50 workers) are exempt from Affordable Care Act reporting requirements. 

However, if you’re offering self-insured health plans, your ACA filing requirements include information on the coverage provided, regardless of whether you meet the ALE threshold.

Key ACA Forms You Need to File

Here’s a comprehensive overview of ACA reporting requirements for employers, including Form 1095 reporting requirements and their specific purposes:

ACA Reporting Deadlines for 2025

You must meet the following ACA reporting deadlines in 2025, covering the 2024 tax year:

Penalties for Non-Compliance

Failing to follow ACA compliance requirements can lead to costly penalties for your business. Whether missing deadlines, submitting incorrect forms, or not offering adequate coverage, the IRS imposes strict fines. 

Here’s how you can stay compliant and avoid unnecessary expenses: 

1. Filing-related penalties

If you don’t file ACA forms on time or make errors in your submissions, your business could face the following fines:

For example, 

• You have 200 full-time employees and missed the March 31, 202, ACA deadlines for electronic filing—
  • Penalty applies: 200 x $310 = $62,000

2. Coverage-related penalties

If your business doesn’t offer Minimum Essential Coverage (MEC) or the coverage you offer isn’t affordable or doesn’t meet minimum ACA rules, you could face additional penalties:

For example, 

• Your business has 100 full-time employees and doesn’t offer health coverage:
  • Penalty A applies: (100 - 30) x $2,970 = $207,900

• In the second case, where you offer coverage, but it doesn’t meet affordability rules, and 10 employees receive premium tax credits:
  • Penalty B applies: 10 x $4,460 = $44,600

Best Practices for ACA Reporting

Staying compliant with ACA reporting requirements is easier when you follow these best practices:

Moving on, let’s explore ACA electronic filing requirements.

Using electronic filing to simplify ACA compliance

You must switch to electronic filing for IRS-mandated ACA reports when handling 10 or more forms. 

Additionally, electronic filing for ACA reporting offers several significant advantages:

• Submissions are processed instantly, avoiding delays caused by mailing paper forms.
• Automated validation checks detect and flag errors before submission, minimizing penalties.
• Provides instant receipt confirmation from the IRS, ensuring proof of compliance.
• Uses encryption technologies to protect sensitive employee and company data.
• Allows quick corrections and resubmissions if errors are found after filing.
• Syncs seamlessly with payroll and HR software for accurate data transfer.
• Prevents fines of $310 per form for failing to e-file when required.

ACA Compliance for Employers: Steps to Success

Here’s a step-by-step ACA Guide to ensure your business remains compliant with IRS requirements and avoids penalties:

Step 1: Determine Employer Status

• Confirm if you qualify as an Applicable Large Employer (ALE) by averaging 50 or more full-time equivalent employees over the previous year, or
• Small employers with self-insured plans should check if they need to report the Minimum Essential Coverage (MEC) provider. This is important even if you are not an Applicable Large Employer (ALE).

Step 2: Track Employee Hours and Collect Data

• Track hours worked by each employee to determine full-time eligibility (30+ hours/week).
• Record Social Security Numbers, dates of coverage, dependents, and plan details.

• Use IRS safe harbor methods to prove compliance with affordability requirements.
• Keep documentation for at least 3 years for IRS audits.

Step 3: Prepare IRS Forms

• Form 1095-C – Provide details about offered coverage to employees and the IRS.
• Form 1094-C – Submit this transmittal form summarizing 1095-C submissions.
• Form 1095-B – For small employers with self-insured plans, report employee coverage.

Step 4: Meet Filing Deadlines

• Furnishing form 1095-C to employees by January 31, 2025.
• File electronically by March 31, 2025, or by February 28, 2025, for paper submissions.

Preparing for ACA year-end reporting

Taking proactive steps throughout the year can streamline the ACA reporting process and eliminate last-minute challenges. 

Invest in ACA compliance software to streamline data collection, generate forms, and submit them directly to the IRS. 

This reduces manual work and ensures you meet deadlines without errors.

How Skuad Can Help

Skuad’s employer-of-record platform simplifies ACA reporting requirements by tracking employee work hours in real-time, managing ACA reports—forms 1095-C and 1094-C—and efficiently meeting filing deadlines. 

Our validation checks help identify errors before submission, reducing the risk of penalties. You can combine Skuad services with built-in payroll and HR systems, enabling accurate data synchronization and faster reporting.

Additionally, Skuad keeps you updated on regulatory changes and supports electronic filing. 

Book a demo today to learn more about our use cases. 

By using Skuad, you can save time, reduce compliance risks, and avoid costly penalties while focusing on growing your business.

FAQs

1) What is required for ACA reporting?

You must provide Form 1095-C (or 1095-B for self-insured plans) to employees by January 31 and submit the forms along with Form 1094-C to the IRS by March 31 (or February 28 for paper filings). The forms include details on whether the health coverage meets minimum essential coverage (MEC) and affordability standards.

2) What are the ACA minimum requirements?

The ACA requires employers with 50 or more full-time employees to offer affordable health insurance to their workers and dependents, or they may face penalties.

3) How do I know if I have to file ACA?

You must file an ACA compliance report if employing 50 or more full-time employee equivalents. Even small employers offering a self-insured health plan must comply with ACA filings. 

4) What is the 95% rule for ACA?

The 95% rule for ACA applies to Applicable Large Employers (ALEs)—under which you must support at least 95% of full-time employees and their dependents with Minimum Essential Coverage (MEC). 

5) What is the penalty for not filing ACA reporting?

The penalty for not filing ACA reporting depends on the nature of the filing. If it is a filing-related issue, it is a minimum of $310 per form, or if it is coverage-related, the minimum acceptable amount starts from $2970 per employee.

6) Who is required to file a 1094 and 1095 form?

IRS forms 1094 and 1095 are classified into C-series, filed by Applicable Large Employers (ALEs), and B-series, filed by small employers offering self-insured health plans.