What Is ACA Filing and Who Needs to Report?

ACA filing involves annual reporting requirements under the Affordable Care Act (ACA) for certain employers and entities regarding the health coverage they offer to employees. This process helps ensure compliance with the ACA’s employer shared responsibility provisions. It involves submitting specific forms to the Internal Revenue Service (IRS) and providing statements to employees.

Entities Required to File ACA Information

ACA filing obligations primarily apply to Applicable Large Employers (ALEs). An ALE is an employer that had 50 or more full-time equivalent employees (FTEs) in the preceding calendar year. This calculation is crucial for employers to understand their reporting obligations.

To determine ALE status, employers calculate their total workforce size for the prior year. This involves counting full-time employees—those working at least 30 hours per week or 130 hours per month. Part-time employees are factored in by combining their monthly hours and dividing the sum by 120 to arrive at a full-time equivalent. The average number of full-time and full-time equivalent employees over the preceding calendar year dictates an employer’s ALE status for the current year.

Beyond ALEs, other entities also have reporting obligations. These include insurers and employers that are self-insured but are not ALEs. These entities use different forms, specifically Forms 1094-B and 1095-B, to report health coverage information. The primary focus for many employers remains on accurately determining their ALE status as the initial step in fulfilling ACA reporting requirements.

Gathering Information and Preparing Forms

Preparing ACA forms involves collecting specific data and accurately populating the relevant IRS documents. Applicable Large Employers use Form 1094-C, which serves as a transmittal form, and Form 1095-C, which reports detailed employee-specific health coverage information. For non-ALE self-insured employers and insurers, Forms 1094-B and 1095-B are used.

Form 1095-C requires comprehensive information for each full-time employee. This includes the employee’s name, Social Security number, and address, along with the employer’s details. The form specifies whether health coverage was offered to the employee, the type of coverage, and the employee’s share of the lowest-cost monthly premium for self-only coverage. It also details which of the affordability safe harbors (W-2 wages, rate of pay, or federal poverty line) the employer used, if applicable. The form also tracks coverage months for each employee.

Form 1094-C acts as a cover sheet for the accompanying 1095-C forms and provides aggregate information to the IRS. It includes certifications, such as whether the employer offered minimum essential coverage to at least 95% of its full-time employees. It also reports the total number of Forms 1095-C being transmitted and the monthly full-time employee counts for the employer. For employers part of an aggregated ALE group, information about all members of that group is also required on Form 1094-C.

Accurate data collection from payroll and benefits systems is essential for correctly populating these forms. Most employers utilize specialized software solutions due to the complexity and volume of information required for completion. This software helps in interpreting data and ensuring correct entry, which is crucial for compliance.

Submitting Your ACA Information

Once ACA forms are prepared, employers must adhere to specific methods and deadlines for submission to the IRS and for furnishing statements to employees. Electronic filing is generally mandatory for employers that file 10 or more information returns in aggregate, which includes Forms 1094-C and 1095-C, along with other types of returns like W-2s and 1099s. This electronic submission is performed through the IRS Affordable Care Act Information Returns (AIR) program. To use the AIR system, employers typically need to obtain a Transmitter Control Code (TCC) and use approved software to submit XML files.

For employers filing fewer than 10 forms, paper filing remains an option. Paper forms, including Form 1094-C and its accompanying Forms 1095-C, are mailed to the IRS. The annual deadline for furnishing Form 1095-C statements to employees is March 3rd. This deadline has a permanent 30-day extension from the original January 31st due date.

Regarding filing with the IRS, the deadline for paper submissions is February 28th. For electronic submissions, the deadline is March 31st. If any of these deadlines fall on a weekend or legal holiday, the due date shifts to the next business day. Employers can request a 30-day extension for filing forms with the IRS by submitting Form 8809, “Application for Extension of Time to File,” before the original deadline. After submission, electronic filers typically receive confirmation of receipt from the IRS. While the automatic furnishing extension is permanent, employers should be aware that some states may have their own separate reporting requirements and deadlines.