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Applicable Large Employers (ALEs) in 2024 must file Affordable Care Act (ACA) reports with the IRS by March 31, 2025, detailing their compliance with the ACA’s employer mandate. ALEs must generate a report for each employee who worked full time for at least one full calendar month of 2024. Additionally, ALEs must furnish copies of these reports to employees by March 3, 2025.
 
Similarly, health insurance plans (including self-funded plans) and health insurance exchanges, such as Covered California and Nevada Health Link, must also produce and file separate ACA reports documenting the health insurance coverage provided to enrollees.
 

What are ALEs?

ALEs are employers subject to the ACA’s employer mandate and IRS reporting requirements. They must offer their full-time employees (and eligible dependents) affordable, minimum value health coverage that covers at least approximately 60% of Essential Health Benefits.
 
ALEs are defined as employers averaging 50 or more full-time employees or full-time equivalents (FTEs) as of January 1 each year, based on their workforce size during the preceding calendar year. For 2024 ACA compliance, ALEs determined their status in January 2024 by evaluating their 2023 workforce. Now, in 2025, those 2024 ALEs must report their compliance efforts to the IRS.
 
Separately, employers must re-evaluate their ALE status for 2025 based on their average workforce size in 2024. Refer to our previous compliance column, Annual Employee Benefits Compliance Responsibilities on January 1st, for details.
 

Purpose of ACA IRS Reporting

The ACA still requires most Americans to maintain Minimum Essential Coverage (MEC) under the federal individual mandate. However, the federal penalty for not having coverage is currently $0.
 
Several states, including California (but not Nevada), have implemented their own individual mandates with tax penalties for noncompliance. To enforce these mandates, reporting requirements exist at both the federal and state levels.
 
ACA employer reporting serves two key purposes:

1. Employer Mandate Enforcement:
   • ALEs must offer affordable, minimum value health coverage to full-time employees and their dependents. ALEs must report these offers of coverage to the IRS so the federal government can enforce the employer mandate.
2. Individual Mandate Enforcement:
   • Health insurance plans – including fully insured and self-funded plans – must report coverage elected and maintained by individuals.
   • This reporting allows the IRS to enforce the federal individual mandate (despite the $0 penalty) and enables states like California to enforce their own mandates with tax penalties.
   • Fully insured employers have their coverage reporting handled by their insurance carriers. However, self-funded employers must handle this reporting themselves because they don’t have a traditional insurer to do it for them.

• ALEs with self-funded plans must file ACA forms (Forms 1094-C and 1095-C) to fulfill both the employer mandate and the individual mandate reporting requirements.
• Non-ALE employers with self-funded plans, like fully insured health plans, must report only on the coverage elected and maintained by individuals for enforcement of the individual mandate, using Forms 1094-B and 1095-B.

In California, self-funded employers must submit ACA reports to both the IRS and the California Franchise Tax Board (FTB) to support state-level enforcement of the individual mandate.
 

Overview of ACA IRS Forms

ALEs are required to submit IRS Form 1094-C and IRS Forms 1095-C for all persons employed full time for at least one calendar month of the reporting year.
 
IRS Form 1094-C contains company information, which tells the IRS who the submitting ALE is, how many 1095-C reports it is submitting, certificates of eligibility, affiliated employees (common ownership and “controlled group” information), employee count, etc.
 
IRS Form 1095-C contains employee information, related to the coverage offered by the ALE. It includes the employee’s required contribution for the lowest-cost ACA compliant health plan offered by the ALE (at the employee-only rate), the ACA affordability safe harbor, and other important information – unless certain reporting “safe harbors” apply.
 
Health Insurance Exchanges (Covered California, Nevada Health Link, etc.) and health plans use Form 1095-A and 1095-B to report on coverage maintained by the taxpayer and his or her dependents. There are three versions of IRS Form 1095, and forms must be filed with IRS and copies must be furnished to the person whose information is reported. 

ACA IRS Reporting Due Dates

• March 3, 2025: Deadline to furnish Forms 1095 to employees.
• March 31, 2025: Deadline to file Forms 1094 and 1095 electronically with the IRS.

 
Most ALEs rely on payroll providers or third-party vendors for ACA filing, as direct submission requires specialized systems.
 

ACA IRS Reporting – Non-compliance Penalties

ALEs and plans that do not file as required by the ACA are subject to reporting noncompliance penalties, in addition to potential noncompliance penalties for violations of the ACA’s employer mandate. An employer can be penalized for not submitting forms to the IRS, and for not remitting copies of forms to covered individuals – making the reporting penalties effectively double.
 
For forms submitted not more than 30 days late from the March 31, 2025, deadline, the penalty is $60/form. For forms submitted more than 31 days late but before August 1, 2025, the penalty is $130/form. For forms submitted after August 1st, the penalty is $330/form.
 
For intentional disregard, the penalty is $660/form – and there is no limitation on the maximum penalty amount. Otherwise, non-compliance penalties are capped between $232,500 and $3,987,000 per employer, depending on the size of the employer and the tardiness of the forms’ submission.
 
The IRS may impose fines of up to $310/form upon ALEs that submit ACA IRS forms with incomplete or inaccurate information. ALEs working with third-party vendors to facilitate ACA reporting should review their forms for accuracy before submitting them to the IRS to avoid such penalty.
 

Reporting Extensions – Including for Employers Impacted by the Historic 2025 Los Angeles Fires

All ALEs and small employers with self-funded plans subject to ACA IRS reporting may request an automatic 30-day extension to file their ACA forms with the IRS if they cannot meet the electronic filing deadline of March 31, 2025.
 
This extension can be requested by completing and submitting IRS Form 8809, Application for Extension of Time to File Information Returns, on or before the original due date. This first 30-day extension is automatically approved – no reason is required.
 
Employers experiencing hardship due to circumstances such as fire, natural disasters, or other catastrophic events may request an additional 30-day extension by submitting a second IRS Form 8809. Unlike the automatic first extension, this second request must include the appropriate box(es) checked to explain the need for more time.
 
It’s important to note that while the first extension can be submitted electronically, the second must be filed on paper and is subject to IRS approval. Employers should submit this request as soon as they are aware additional time is needed.
 
For California state reporting, health plans’ deadlines for furnishing IRS Forms 1095 to the California Franchise Tax Board (FTB) remain unchanged as of this article’s 1/17/2025 posting. However, additional guidance may be issued as the state responds to the ongoing impact of the Los Angeles County fires. A recent press release from the Governor’s office confirms that certain tax deadlines and filing requirements have been delayed for those affected by the LA wildfires, though specifics for ACA reporting have not yet been provided.
 

New Laws Simplify ACA Reporting in 2025 and Beyond

On December 23, 2024, President Biden signed two pieces of legislation that aim to make ACA reporting less cumbersome for employers and insurers: the Paperwork Burden Reduction Act (H.R. 3797) and the Employer Reporting Improvement Act (H.R. 3801). While ALEs must still prepare, furnish, and file Forms 1094/1095 on time, these updates introduce key changes that streamline the process for 2024 IRS reporting onward.
 

Here’s a summary of what’s new:

• Optional Mailing of Forms 1095-B/1095-C: Employers and insurers are no longer required to automatically mail Forms 1095-B or 1095-C. Instead, they must provide a clear and accessible notice (per IRS guidelines) informing individuals that they can request a copy. Upon request, the form must be provided by the later of January 31 or within 30 days of the request. Typically, only employees who claimed a Premium Tax Credit (PTC) through a state exchange will need these forms, as they are used to verify PTC eligibility during tax filing.
• Relief for Insurers and Self-Funded Employers: Carriers have already been allowed to notify individuals online about the availability of Form 1095-B instead of mailing it, but this relief is now written into law. Additionally, this same flexibility now applies to employers, including those with self-funded plans.
• Simplified Dependent Reporting: If an employer or insurer cannot collect a Taxpayer Identification Number (TIN) for a covered dependent, their name and date of birth may be reported instead. This removes one of the common roadblocks that employers face when filing.
• Permanent Electronic Consent Rules: Individuals who previously consented to receive their forms electronically will now continue to receive them this way unless they revoke their consent in writing. Employers no longer need to obtain consent each year, simplifying electronic delivery.
• More Time to Respond to IRS Notices: Employers now have at least 90 days to respond to IRS Letter 226-J penalty notices for potential ACA employer mandate violations, compared to the typical 30-day response period previously allowed. This change gives employers more time to prepare and provide necessary documentation. Many ACA employer mandate penalties can often be reduced or avoided entirely, as they are frequently triggered by errors in the ALE’s ACA IRS reporting.
• Statute of Limitations for ACA Employer Mandate penalties: The statute of limitations for ACA employer mandate penalties is now six years from the forms’ original due date (or the date they were actually filed, if later). Employers should ensure they maintain accurate records for this extended timeframe.

These changes bring much-needed relief to the ACA reporting process, reducing unnecessary mailings, and extending timelines for compliance and documentation. However, the underlying obligations remain: ALEs and health plans must still accurately prepare and file their forms, meet furnishing deadlines, and respond to IRS notices when necessary.
 
Employers are encouraged to review their reporting procedures now to ensure compliance under these new rules, as we wait for further regulation to likely follow. While the updates simplify some aspects, careful preparation and attention to detail remain critical to avoid penalties and stay compliant in 2025 and beyond.