Week 21: It’s Employer Reporting Season!

Each year, employer ACA reporting season brings the same question to the surface: “Why does this still feel so complicated?”

The answer is that ACA reporting isn’t one requirement; it’s two overlapping reporting systems, each with different triggers, forms, and penalties. Add level-funded plans to the mix, and it’s easy for even well-intentioned employers to miss something important.

Below is a practical deep dive into what employers must report, when they must report it, and why penalties often stem from reporting mechanics rather than coverage failures — with insights informed by compliance guidance from ABY Benefits, a third-party administrator that helps employers navigate ACA reporting and other compliance obligations.

ACA reporting falls under two different sections of the Internal Revenue Code, and understanding the distinction is critical.

1. Employer Offer Reporting (IRC §6056)

Applicable Large Employers (ALEs) — generally those with 50 or more full-time equivalent employees — must report whether they offered health coverage to full-time employees that was affordable and provided minimum value. This is done using Forms 1094-C and 1095-C.

This reporting allows the IRS to determine whether an employer met its employer shared responsibility obligations and whether an employee may be eligible for premium tax credits.

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2. Coverage Reporting (IRC §6055)

Separate from offer reporting, providers of minimum essential coverage must report who was actually covered under a health plan and for which months.

Employers sponsoring self-insured plans are considered coverage providers and must report enrollment information:

• ALEs report coverage on Form 1095-C, Part III

• Non-ALEs report coverage using Forms 1094-B and 1095-B

This is where many smaller employers — who are not subject to the employer mandate — are surprised to learn they still have ACA reporting obligations.

Level-funded plans often look and feel like fully insured plans, but for ACA reporting purposes they are typically treated as self-insured arrangements.

That means:

• ALEs with level-funded plans generally must complete Part III of Form 1095-C to report covered individuals and months of coverage. (ALEs with fully insured plans typically complete only Parts I and II, with the carrier handling coverage reporting.)

• Non-ALEs with level-funded plans may still have IRC §6055 reporting obligations and generally report coverage using Forms 1094-B and 1095-B, even though they are not subject to employer mandate penalties.

Employers frequently assume the carrier or stop-loss provider handles reporting automatically. In reality, reporting responsibility depends on how the plan is structured and how vendor contracts allocate compliance duties.

This is one of the most common places where reporting gaps occur.

For coverage and offers during the 2025 calendar year, the major deadlines are:

Furnishing Statements to Individuals

• March 2, 2026 — Deadline to furnish Forms 1095-C or 1095-B to employees or responsible individuals

Filing with the IRS

• March 2, 2026 — Paper filing deadline (if eligible)

• March 31, 2026 — Electronic filing deadline

Employers filing 10 or more total information returns (counting Forms W-2, 1099s, and ACA forms combined) are required to file electronically.

Not always.

Employers may use an alternative furnishing method for certain ACA forms. Instead of mailing a form to every individual, an employer may:

• Post a clear and conspicuous notice on its website by March 2, 2026, and

• Provide the form within 30 days of a request

This option can reduce administrative burden, but it does not eliminate IRS filing requirements, and it must be implemented carefully to comply with IRS rules.

According to ABY Benefits, employers tend to focus on employer mandate penalties while underestimating information reporting penalties, which apply more broadly and occur more often.

Employer Mandate Penalties (IRC §4980H)

These penalties apply only to ALEs and are triggered when at least one full-time employee receives a premium tax credit.

• 4980H(a) (“A” Penalty)
  Applies when coverage is not offered to at least 95% of full-time employees.
  2025 amount: $2,900 per full-time employee (minus the first 30)

• 4980H(b) (“B” Penalty)
  Applies when coverage is offered but is unaffordable or does not provide minimum value.
  2025 amount: $4,350 per affected employee receiving a subsidy

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Information Reporting Penalties (IRC §§6721 & 6722)

Separate penalties apply for:

• Failing to file correct ACA forms with the IRS, and

• Failing to furnish correct statements to individuals

Because these are separate requirements, a single failure can result in two penalties for the same form.

For 2025 forms filed and furnished in 2026, the standard penalty is:

• $340 per return or statement,
  up to $4,098,500 annually
  (reduced caps apply for employers with gross receipts of $5 million or less)

Reduced penalties apply if errors are corrected:

• $60 per form if corrected within 30 days

• $130 per form if corrected by August 1

Higher penalties apply if there is intentional disregard of filing or furnishing requirements.

Importantly, these penalties can apply even when coverage was offered correctly, making reporting accuracy and timeliness just as critical as plan design.

Before reporting season peaks, employers should:

• Confirm whether they are an ALE, including controlled-group considerations

• Determine whether their plan is fully insured, self-insured, or level-funded

• Identify who is responsible for reporting — payroll vendor, benefits administrator, TPA, or internal staff

• Verify electronic filing requirements and AIR system readiness

• Decide whether to use the alternative furnishing method and implement it correctly

• Consider requesting a Form 8809 extension if additional time is needed for IRS filing

ACA reporting is not just about forms — it’s about coordinating eligibility data, enrollment records, affordability calculations, and deadlines across multiple systems.

That’s why many employers rely on third-party administrators and compliance specialists to:

• manage filings,

• reduce penalty exposure, and

• keep reporting aligned with evolving IRS requirements.

Getting reporting right protects employers from avoidable penalties and ensures compliance work doesn’t distract from running the business.