2024 ACA Reporting Requirements
Applicable large employers (ALEs), which generally are entities that employed 50 or more full-time and full-time-equivalent employees in the preceding calendar year, are required to report whether they did or did not offer health coverage to certain employees. To comply with this reporting requirement, the ALE must furnish Form 1095-C (2023 form) to the employee or former employee and file copies, along with transmittal Form 1094-C (2023 form), with the IRS.
A separate IRS reporting requirement applies to any size employer that sponsors a self-funded (self-insured or level funded) health plan providing minimum essential coverage. In that case, the employer must report coverage information about each individual, including dependents, who was enrolled in the plan. To comply with this requirement, the employer must furnish Form 1095-B (2023 form) to the primary enrollee (e.g., employee) and file copies, along with transmittal Form 1094-B (2023 form), with the IRS. Self-funded and level funded employers that are ALEs must use Forms 1095-C and 1094-C, whereas non-ALEs may use Forms 1095-B and 1094-B.
Small employers (under 50 full-time-equivalent employees) that sponsor self-funded (self-insured) or level funded health plans are subject to reporting requirements not discussed here.
Note regarding ICHRAs: Employers that offered individual coverage health reimbursement arrangements (ICHRAs) must report additional information. ICHRA reporting is more complex and is not discussed here.
General Terms
An applicable large employer (ALE) is an employer that employed an average of 50 or more full-time employees, including full-time-equivalent employees, in the prior calendar year.
Full-time employee generally means a common-law employee who averages 30 or more hours of service per week, (or 130 hours per month), as determined under one of two specific measurement methods. An hour of service is each hour for which payment is made or due (e.g., performance of duties, vacation, holidays, paid absence, or leave).
Minimum essential coverage means any employer-sponsored group health plan, other than “excepted benefits.” Most flexible spending accounts (FSAs) or stand-alone dental or vision plans are excepted benefits; that is, they are not minimum essential coverage.
Minimum value coverage means the minimum essential coverage plan’s share of the total allowed cost of benefits is at least 60% of such costs and it provides substantial coverage of inpatient hospitalization services and physician services. For 2023, the minimum value coverage was affordable if the employee’s required contribution for self-only coverage did not exceed 9.12% of the employee’s income from the employer. For 2024, the percentage decreased to 8.39% due to inflation adjustments.
Frequently Asked Questions Regarding ACA Reporting
What is the purpose of the employer reporting requirements?
The reporting requirements are intended to help the IRS administer several provisions under the Affordable Care Act. Specifically, the IRS uses information reported by employers to determine:
Employees that are (or are not) eligible for subsidies if they purchase health insurance in the individual Health Insurance Exchange (Marketplace); and
ALEs that fail to offer affordable minimum value coverage to full-time employees and whether the employer may be subject to potential penalties.
What is Form 1095-C?
Form 1095-C is a form designed by the IRS to collect information about ALEs and the group health coverage, if any, they offer to their full-time employees. Employers provide Form 1095-C (employee statement) to employees and file copies, along with Form 1094-C (transmittal form), to the IRS.
Form 1095-C is comprised of three parts:
Part I: Identifying information about the employee and the employer.
Part II: Information about the employer’s offer of group health coverage.
Part III: Information about the employer’s self-funded health coverage (if any), including names and Social Security numbers of the primary enrollee (e.g., employee) and their covered dependents.
What are the due dates for completing the reporting requirements?
The 2023 forms (i.e., forms reporting calendar year 2023 information) are due as follows:
2023 Form 1095-C (employee statement): Due March 1, 2024.
2023 Form 1094-C (transmittal form with copies of Forms 1095-C): Due February 28, 2024 (or April 1, 2024, if filing electronically).
Note: If the due date falls on a weekend or legal holiday, the employer may file by the next business day.
If the employer is part of a controlled group, which entity has to provide Form 1095-C?
Entities that belong to the same controlled group, e.g., parent/subsidiary companies or sister companies under common control, are counted together, and their combined employee size determines if they are an ALE. If so, each entity in the controlled group is deemed an ALE and is subject to the reporting requirements. Each of the entities will report under its Employer Identification Number (EIN).
What type of information is required to complete Form 1095-C?
Employers should work with their payroll administrators and human resources information system administrators to identify the data elements needed to complete Forms 1095-C and 1094-C. The level of detail will vary depending on the employer’s health coverage offerings.
All ALEs must report basic information, similar to W-2 information:
Employee name, Social Security number (SSN), address.
Employer name, Employer Identification Number (EIN), address, telephone contact.
IRS regulations provide a general method for all ALEs to complete Form 1095-C. The general method requires reporting information about the full-time employee and the health coverage (type, required contribution) offered to that employee. Some employers, however, may be able to take advantage of one of the alternative (simplified) methods outlined in the regulations.
For example, alternative methods of reporting are available for employers that made a qualifying health coverage offer to employees for all 12 months or for employers that offered affordable minimum value coverage to at least 98% of full-time employees (and their children).
Employers that do not sponsor a self-funded (self-insured or level funded) plan complete Parts I and II for each full-time employee. Part III will be left blank.
(Persons covered under a fully insured group insurance plan also may receive a separate form (1095-B) directly from the insurance company regarding the coverage. A carrier’s filing requirements are separate from an employer’s requirements. Some carriers do not send that form automatically, but instead make it available upon request.)
For self-insured or level funded employers, what type of information is required to complete Form 1095-C?
Employers that sponsor a self-funded (self-insured) or level funded health plan providing minimum essential coverage have additional reporting requirements. For full-time employees, the employer completes Parts I and II of Form 1095-C. If the full-time employee was covered under the self-funded plan, the employer also completes Part III including names and SSNs or Taxpayer Identification Numbers (TINs) of any covered dependents.
In addition, for any part-time employees or non-employees (e.g., COBRA beneficiaries) covered under the self-funded plan, the employer completes Part I, a portion of Part II, and Part III.
Note: The IRS instructions allow using Form 1095-B, not described here, in lieu of Form 1095-C to report self-funded or level funded plan coverage for non-full-time employees or non-employees (i.e., COBRA beneficiaries). Self-funded and level funded employers also have the option of posting a notice on their website with instructions for how non-employees and non-full-time employees enrolled in their coverage may request a form, instead of the employer automatically providing one to them. That option is not discussed here.
Are nonprofit employers or governmental employers (e.g., municipalities, public school districts) subject to the reporting requirements?
Yes, the reporting requirements apply to all ALEs, including governmental employers. Employers should review the specific requirements for their type of organization with their advisors.
What is Form 1094-C?
Employers file copies of Forms 1095-C with transmittal Form 1094-C to the IRS. The employer indicates on Form 1094-C if it is eligible for alternative (simplified) reporting. Employers also use this form to certify that the employer is eligible for transition relief under the ACA “play or pay” rules, if applicable.
Are employers required to use electronic filing?
ALEs must furnish Form 1095-C to individuals on paper by mail (unless the recipient has affirmatively consented to receive the information in an electronic format).
Form 1094-C and Form 1095-C are subject to requirements to file returns electronically with the IRS. This means that ALEs that file 10 or more information returns (aggregated with other forms such as W-2 and 1099 series) must file the returns electronically through the ACA Information Returns (AIR) program.
Note that AIR is a separate system solely for ACA information returns. Other IRS e-filing systems, such as for W-2s, do not support the ACA information returns.
The 10-or-more requirement does not apply separately to each type of return.
Are there penalties for failing to comply with the information reporting requirements?
Yes, and the penalties may be substantial. For instance, the penalty is $310 for each failure to file a complete return and for each failure to provide a complete form to an employee (up to over a $3,000,000 maximum). Lesser penalties may be imposed for reporting incorrect information provided the error is corrected within certain timeframes. Generally, the maximum penalties are reduced for ALEs with receipts less than $5,000,000. The IRS may abate penalties for reasonable cause.
Official Guidance
The IRS released final forms and instructions to be used for Internal Revenue Code § 6055 and § 6056 reporting.
For 2023 reporting (forms are due in early 2024):
2023 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage is available in final form.
2023 Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns is available in final form.
Instructions for 2023 Forms 1094-C and 1095-C are not available yet.
Additionally, the IRS maintains a helpful Information Center webpage with resources and tips for applicable large employers about the information reporting requirements and other topics.
For entities that are required to file returns electronically, the IRS has not yet released a 2023 version of Publication 5165 (2024), Guide for Electronically Filing ACA Information Returns.
Information provided curtesy of Mineral, a leading compliance expert and HR solutions provider.