Information reporting requirements under the Affordable Care Act

This article was originally published on January 15, 2023. It has been updated to reflect 2024 filing requirements.

Executive summary:  New electronic filing requirement for certain employers

The IRS has expanded its electronic filing requirements for Forms 1095-B and 1095-C filed on or after Jan. 1, 2024.  Previously, only employers filing at least 250 forms were required to file electronically; employers filing fewer than 250 forms could file on paper. Starting in 2024, employers filing at least 10 information returns of various types must electronically file Forms 1095-B and 1095-C. The 2023 Forms 1095-B and 1095-C must be furnished to employees by March 1, 2024, and electronically filed with the IRS by April 1, 2024. Some employers will also have state furnishing and filing requirements.

Background

The Affordable Care Act (ACA) has imposed significant information reporting responsibilities on insurance companies and employers since 2015. These entities are required to file annual information returns reporting information about health plan coverage. Like Form W-2, the Form 1095-B or 1095-C is provided to employees then sent to the IRS with a transmittal form (Form 1094-B or 1094-C).

Forms 1095-B (Health Coverage) and 1094-B (Transmittal of Health Coverage Information Returns) must be filed by insurance companies to report individuals covered by insured employer-sponsored group health plans. Small employers with self-insured health plans file these forms to report employees and their family members who have coverage under the self-insured plan. Employees who are offered coverage, but decline the coverage, are not reported. Small employers are those that had, on average, fewer than 50 full-time employees (including full-time equivalent employees) during the preceding calendar year.

Forms 1095-C (Employer-Provided Health Insurance Offer and Coverage) and 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns) must be filed by (1) applicable large employers, and (2) small employers that are applicable large employer group members. Small employers that are not applicable large employer group members do not file Forms 1095-C and 1094-C. Forms 1095-C and 1094-C are required if the employer offers an insured or self-insured health plan, or does not offer any group health plan.

Applicable large employers

Applicable large employers are those that had, on average, at least 50 full-time employees (including full-time equivalent employees) during the preceding calendar year. Full-time employees are those who work, on average, at least 30 hours per week.

Small employers will be applicable large employer group members if they are in an aggregated group that collectively has at least 50 full-time employees (including full-time equivalents).

Companies could be in an aggregated group if they have common owners, provide services for each other or work together to provide services to third parties. Aggregated groups may be comprised of controlled groups or affiliated service groups as defined in section 414.

Example: Smith and Jones each own 50 percent of Company A and Company B. Because of this ownership, A and B are an aggregated group, and the filing requirements for A and B are based on the number of employees that they have collectively. If A and B together had at least 50 full-time employees (including full-time equivalents) in the prior calendar year, then A and B are each a member of an applicable large employer group for the current year, and both A and B would be required to file the forms. Thus, if A had 35 full-time employees in the prior calendar year and B had 30, A and B would each be a member of an applicable large employer group with 65 employees, and both would have to file Forms 1095-C and 1094-C. If A had 35 full-time employees and B had only 10, then A and B would not be members of an applicable large employer group since, collectively, they only had 45 employees (which is less than the 50-employee threshold). In that case, neither A nor B would file Forms 1095-C and 1094-C.

Filing summary

The following chart summarizes the filing requirements based on the size of the employer and its member status in an applicable large employer group (ALEG). For purposes of this chart, a small employer is one with fewer than 50 full-time employees (including full-time equivalents) and a large employer is one with at least 50 full-time employees (including full-time equivalents) during the preceding calendar year. The column titled “ALEG Member” denotes whether the employer was in an aggregated group that collectively had at least 50 full-time employees (including full-time equivalents) during the preceding calendar year.

*Employers with non-employees enrolled in their self-insured health plans, such as directors, retirees and individuals on COBRA, can elect to report these non-employees on Forms 1095-B and 1094-B instead of Forms 1095-C and 1094-C.

Filing due dates

Due date for providing forms to employees

Forms 1095-B and 1095-C are required to be furnished to employees by Jan. 31 for the preceding calendar year. However, as in prior years, the IRS has granted employers an automatic extension of time for providing Forms 1095-B and 1095-C to employees. For the 2023 forms, the extended due date is March 1, 2024. Employers may not request a further extension beyond this date.

The Form 1095-B or 1095-C must be furnished to an employee by mail (or hand delivered) unless the employee affirmatively consents to receive the form in an electronic format. The IRS has provided an alternative manner for furnishing Forms 1095-B to employees and Forms 1095-C to non-full-time employees and non-employees enrolled in an employer’s self-insured health plan. In these cases, in lieu of furnishing the form, the employer can prominently post a notice on its website stating that employees may receive a copy of their form upon request. The employer must provide the email address, physical address and telephone number for the request, and furnish the form within 30 days of receiving any request. The notice must be posted by March 1, 2024, and remain on the website through October 15, 2024.

Due date for providing forms to the IRS

Forms 1095-B and 1095-C for 2023, along with Forms 1094-B and 1094-C, are required to be filed with the IRS by Feb. 28, 2024 (if filed on paper), or April 1, 2024 (if filed electronically).  Employers can request an automatic 30-day extension of time for filing the returns by submitting Form 8809 (Application for Extension of Time to File Information Returns) on or before the normal due date of the returns. Employers experiencing certain hardship conditions may apply for an additional 30-day extension by filing a second Form 8809.

The IRS has expanded the electronic filing requirements starting with 2023 forms filed in 2024. Previously, electronic filing was required if the employer filed at least 250 Forms 1095-B or 1095-C. However, for Forms 1095-B and 1095-C filed on or after Jan. 1, 2024, the employer must file electronically if the employer is required to file 10 or more information returns during the year. The 10-or-more requirement applies in the aggregate to certain information returns that are original or corrected returns. Consequently, nearly all employers will now be required to electronically file Forms 1095-B and 1095-C. For more information about this change in the electronic filing requirements, see our article entitled IRS expands e-filing with new penalties for more paper forms.

Employers may request a waiver from filing the Forms 1095-B and 1095-C electronically by submitting Form 8508 (Request for Waiver from Filing Information Returns Electronically) by the due date of the returns. Employers are encouraged, but not required, to file Form 8508 at least 45 days before the due date of the returns.

Penalties

Employers can be subject to IRS penalties of up to $310 per return for failing to provide Form 1095-B or 1095-C to an employee. In addition, they can be assessed another $310 for failing to timely provide Form 1095-B or 1095-C to the IRS. Therefore, employers could face penalties of $620 per return. Penalties may be reduced from $310 per return to $50 per return if the returns are furnished to employees or filed with the IRS within 30 days of the required due dates. In addition, if employers correct any filing failures after the 30 days described above but on or before Aug. 1, the per-return penalty may be reduced from $310 to $100. Penalties can also apply for failing to provide complete or correct returns or for failing to file electronically, if required.

State requirements

Certain states impose their own requirements on employers for furnishing and filing Forms 1095-B and 1095-C (or alternative forms). States with information reporting requirements include California, Massachusetts, New Jersey, Rhode Island and the District of Columbia. The due dates and penalties for late furnishing and filing vary by state. For more information on the various state requirements, see our article entitled Tax penalties on individuals without health insurance.

Form 1095-C and Form 1094-C

Applicable large employer and ALEG members must prepare a Form 1095-C for each full-time employee regardless of whether the employee is participating in an employer-sponsored group health plan. If an employer has a self-insured health plan, it will also complete a Form 1095-C for each non-full-time employee who is enrolled in the plan. 

Form 1095-C reports the following information to the IRS:

• The employer’s name, address and employer identification number
• The employee’s name, address and Social Security number
• Whether the employee and family members were offered health coverage each month that met the minimum value standard
• The employee’s share of the monthly premium for the lowest-cost minimum value health coverage offered
• Whether the employee was a full-time employee each month
• The affordability safe harbor applicable for the employee
• Whether the employee was enrolled in the health plan
• If the health plan was self-insured, the name and Social Security number (or birth date if the Social Security number is unavailable) of each employee and family member covered by the plan by month

Form 1094-C is used to transmit the Forms 1095-C to the IRS. The Form 1094-C reports the following information:

• The employer’s name, address, employer identification number and contact person
• The total number of Forms 1095-C filed
• A certification by month as to whether the employer offered its full-time employees (and their dependents) the opportunity to enroll in minimum essential health coverage
• The number of full-time employees for each month of the calendar year
• The total number of employees for each month
• Whether special rules apply to the employer
• The names and employer identification numbers of other employers that are in an aggregated group with the employer

Each applicable large employer or ALEG member is required to file Forms 1095-C and 1094-C for its own employees, even if it participates in a health plan with other employers (e.g., when the parent company sponsors a plan in which all subsidies participate). Special rules apply to governmental entities and to multiemployer plans for collectively-bargained employees.

Special rules apply for employers that have a group health plan and a health reimbursement arrangement (HRA). Employers with an insured or self-insured group health plan do not need to separately report the HRA coverage for employees enrolled in both the group health plan and the HRA. However, reporting is required for employees participating in the HRA who are not enrolled in the employer’s group health plan (for example, employees who are enrolled in a spouse’s employer’s plan). 

IRS use of information

Individuals

The IRS uses the information on Form 1095-C to determine whether an individual is eligible for premium tax credits on insurance purchased through the health insurance marketplace. Individuals report their premium tax credits on their individual income tax returns.

Employers

The IRS uses the information provided on Forms 1095-C and 1094-C to determine whether employers are liable for a penalty known as a shared responsibility payment. This penalty can be imposed on any applicable large employer or ALEG member that does not offer affordable, minimum value health coverage to all of its full-time employees. In the case of an aggregated group, the penalty applies to each member of the group individually. For more information on employer shared responsibility payments, please see this article.

Action required

The information reporting requirements are complex so employers should take the following actions:

• Learn more about the information reporting requirements through IRS resources available on the ACA Information Center for Applicable Large Employers (ALEs)
• Review ownership structures of related companies and perform an aggregated group analysis to determine applicable large employer group members
• Discuss the reporting requirements with the health plan’s insurer or third-party administrator and the company’s payroll vendor to identify the parties responsible for data collection and form preparation
• Review the instructions for Forms 1094-C and 1095-C and, if applicable, the instructions for Forms 1094-B and 1095-B, along with the forms
• Develop procedures for determining and documenting each employee’s full-time or non-full-time status by month
• Develop procedures to collect information about offers of health coverage and health plan enrollment by month
•  Ensure that systems are in place to collect the needed data for the forms
• Confirm that a system is in place to electronically file the forms and, if needed, obtain the appropriate codes for electronic filing as outlined in IRS Publications 5164 and 5165
• Timely file Forms 1095-B, 1095-C, 1094-B and 1094-C