Question: What are the ACA reporting deadlines and requirements at the beginning of 2024 to report on the 2023 calendar year?

Short Answer: The IRS recently finalized guidance confirming that ALEs must furnish the Forms 1095-C to employees no later than March 1, 2024. ALEs must file the Form 1094-C, as well as copies of the Forms 1095-C, with the IRS electronically no later than April 1, 2024. New IRS rules have effectively eliminated the ability to file by paper in 2024, which means employers should ensure they engage with an ACA reporting vendor that can complete the electronic filing on their behalf.

ACA Reporting: Overview

The ACA requires Applicable Large Employers (ALEs) to report whether they offered minimum essential coverage (MEC) that was affordable and provided minimum value to full-time employees.  Employers of any size with self-insured plans (including level funded) also report months of coverage for all individuals. Regardless of funding arrangement, ACA reporting for ALEs is handled via IRS Forms 1094-C and 1095-C.

For more details:

• Newfront ACA Employer Mandate & ACA Reporting Guide

• Key Decision Points in ACA Reporting Vendor Setup Process (Four-Part Series)

• Becoming an ALE Subject to the ACA Employer Mandate

2023 IRS ACA Reporting Forms/Instructions Finalized

The IRS recently finalized the forms and instructions for ALEs subject to ACA reporting at the start of 2024:

• 2023 IRS Form 1094-C

• 2023 IRS Form 1095-C

• 2023 IRS Instructions for Forms 1094-C and 1095-C

ACA Reporting Deadlines for ALEs

Last year, the IRS finalized new ACA reporting regulations that make permanent the 30-day automatic extension from January 31 for employers to furnish the Form 1095-C to individuals. Accordingly, the ACA reporting deadlines for all ALEs in 2024 (regardless of plan year) are as follows:

Form 1095-C: Deadline to Furnish to Individuals

Due Date: March 1, 2024

Note: The 30-day extended deadline is typically March 2. However, because 2024 is a leap year, the 30-day extension puts the deadline at March 1.

Form 1094-C (+Copies of Form 1095-C): Deadline to Electronically File with IRS

Due Date: April 1, 2024

• Note: The deadline is typically March 31. However, because March 31 falls on a Sunday in 2024, the deadline this year is April 1.

Electronic Filing Required for ACA Reporting in 2024

In prior years, ALEs had the option to file Forms 1094-C and 1095-C by paper or electronically if they were filing fewer than 250 returns. Only ALEs with 250 or more returns were required to file electronically.

The IRS recently issued new final regulations outlining the electronic filing requirements that will apply for returns that are required to be filed in 2024. These requirements include the 2023 Forms 1094-C and 1095-C that will be filed at the start of 2024.

Specifically, the final regulations require electronic filing by filers of 10 or more returns in aggregate in a calendar year. This requires filers to consider in aggregate almost all information return types covered by the regulation to determine whether a filer meets the 10-return threshold and is required to e-file their information returns. The new “aggregation of returns” rule means that in calculating whether an employer has at least 10 returns and is required to file electronically, the employer’s Forms W-2, 1099, and multiple other returns (in addition to the Forms 1094-C and 1095-C) are all included together in the 10-return count.

Given that ALEs are entities with 50+ full-time employees, all ALEs (absent very unusual circumstances) will need to file the 2023 Forms 1094-C and 1095-C electronically in 2024.

• For more details: IRS to Require Electronic Filing for ACA Reporting in 2024

Employers Need to Engage with an ACA Reporting Vendor to File Electronically

ACA reporting forms are filed electronically through the IRS Affordable Care Act Information Returns (AIR) system. The AIR system requires an XML schema coding format for transmission. This process is generally not something that a typical employer could navigate and utilize on their own without the support of an ACA reporting vendor. Such vendors might include third-parties that specialize in ACA reporting, or a payroll provider or benefits administration platform that includes ACA reporting services.

In prior ACA reporting seasons, some ALEs filing under 250 Forms 1094-C and 1095-C have opted to file the returns by paper to avoid the complex AIR system filing. However, that will no longer be an option in 2024 and beyond. ALEs will need to prepare for the 2024 filing season (filing the 2023 Forms 1094-C and 1095-C) by ensuring they have engaged with an ACA reporting vendor that can complete the electronic filing on their behalf. Similarly, non-ALEs sponsoring a self-insured plan (including level funded) need to engage with a vendor to file the 2023 Forms 1094-B and 1095-B electronically in 2024.

ACA Reporting: Fully Insured vs. Self-Insured Plans

The specific ACA reporting requirements vary depending on whether the employer is an ALE and whether the medical plan it sponsors is fully insured or self-insured. Note that so-called “level funded” plans are treated as self-insured for these purposes because they are not fully insured.

ALEs sponsoring fully insured medical plans are not subject to the §6055 reporting in Part III of the Form 1095-C. Their only reporting responsibility is under §6056, which is limited to Parts I and II of the Form 1095-C (as well as the full Form 1094-C). Enrolled employees and their dependents’ coverage information for a fully insured plan are instead reported by the insurance carrier on the Form 1095-B. The insurance carrier is solely responsible for furnishing and filing the Form 1095-B coverage information reporting for a fully insured plan, as well as soliciting any missing dependent SSNs.

ALEs sponsoring a self-insured medical plan (including level funded) are also subject to §6055 reporting, and therefore they must complete Part III (in addition to Parts I and II) of the Form 1095-C.

The following overview addresses ACA reporting obligations by employer size and funding arrangement:

ALE Sponsoring a Self-Insured Medical Plan (Including Level Funded)

IRC §6055 and §6056 Reporting

Completed via Forms 1094-C and 1095-C.

Employer must complete Part III of the Form 1095-C (“Covered Individuals”) for enrolled individuals (including COBRA participants).

If the employer sponsors both self-insured and fully insured medical plan options, the employer completes Part III only for individuals enrolled in the self-insured medical plan.

Important Note: “Level funded” plans are considered self-insured for these purposes.

ALE Sponsoring a Fully Inured Medical Plan

IRC §6056 Reporting Only

• Completed via Forms 1094-C and 1095-C.

• Employer does not complete Part III of the Form 1095-C (“Covered Individuals”).

• Insurance carrier completes coverage information on separate Form 1095-B.

Non-ALE Sponsoring a Self-Insured Medical Plan (Including Level Funded)

IRC §6055 Reporting Only

• Completed via Forms 1094-B and 1095-B.

• Employer does not complete Forms 1094-C and 1095-C (b/c not subject to the employer mandate).

• Employer information listed in Part III (“Issuer or Other Coverage Provider”) of the 1095-B.

• Employer does not complete Part II (“Information About Certain Employer-Sponsored Coverage”) of the Form 1095-B.

• Important Note: “Level funded” plans are considered self-insured for these purposes.

Non-ALE Sponsoring a Fully Insured Medical Plan

• No ACA Reporting!

For more details:

• Newfront Compliance Considerations for Self-Insured Plans Guide

• ACA Reporting for Employers with a Self-Insured Health Plan

ACA Reporting: Controlled Groups

Where an ALE subject to the ACA employer mandate has multiple corporate entities in a controlled group (an Aggregated ALE Group), each subsidiary or related entity in the controlled group must file a separate Form 1094-C.  Each entity (EIN) is referred to as an Applicable Large Employer Member (ALEM) for these purposes.

Aggregated ALE Groups will have additional ACA reporting obligations as follows:

The Form 1094-C for each ALEM will contain the following:

• Part II, Line 21: Each ALEM will answer “Yes” to question “Is ALE Member a member of an Aggregated ALE Group?”

• Part III, Column (d): For each month in which the controlled group existed, this “Aggregated Group Indicator” box will be checked.

• Part IV: This “Other ALE Members of Aggregated ALE Group” section will be completed listing the names of the other related entities in the controlled group (the other ALEMs) and their EINs.

The Forms 1095-C from each ALEM will contain the following:
The full-time employees of each EIN (i.e., each ALEM) must receive a Form 1095-C with that ALEM’s corporate name and EIN.  The employer cannot simply use the parent EIN for all Forms 1095-C in an Aggregated ALE Group.

Note: If an employee works for more than one ALEM in the Aggregated ALE Group in any calendar month, the ALEM for whom the employee worked the most hours of service in that calendar month is responsible for the employee’s Form 1095-C ACA reporting for that month.

• For more details: ACA Reporting for Controlled Groups

ACA Reporting: Additional Rules for COBRA

The only additional COBRA-related ACA reporting requirements for employers with a fully insured plan apply for situations where the employee’s qualifying event is a loss of coverage caused by reduction in hours (e.g., full-time to part-time). The appropriate coding in that situation will depend on whether the employee elects COBRA and whether the employee was in employee-only or family coverage.

In addition to the ACA reporting related to COBRA that fully insured plans must address with reduction-in-hours qualifying events, self-insured plans (including level funded plans) must also report the coverage information completed in Part III for all months of active or COBRA coverage.

Part II of the Form 1095-C for COBRA participants who were a full-time employee for at least one month in the year will be completed in the same manner for both a self-insured and fully insured plan.  For individuals whose active coverage terminated in a prior year but were enrolled in COBRA under a self-insured plan for at least one month in the reporting year, the Part II coding will reflect that the individual was not an employee for any month of the year (Code “1G” in Line 14 for all 12 months).

Note: Additional special coverage reporting rules apply where the spouse or dependent elect COBRA separately from the employee.

• For more details: ACA Reporting and COBRA

ACA Reporting: Furnishing Relief for Insurance Carriers (and Self-Insured Non-ALEs)

In light of the TCJA effective repeal of the ACA individual mandate by reducing the penalties to zero as of 2019, the IRS has provided relief to insurance carriers in recent reporting years (referred to as §6055 furnishing relief”) that does not require them to furnish the Form 1095-B to covered individuals.

The relief provides that the IRS will not assess penalties for an insurance carrier’s failure to furnish Forms 1095-B to individuals under two conditions:

1. The insurance carrier posts a notice prominently on its website stating that individuals may receive a copy of their Form 1095-B upon request (with relevant contact information); and

2. The insurance carrier must furnish the Form 1095-B to any individual upon request within 30 days of the date it receives the request.

This relief with respect to insurance carriers furnishing coverage information to individuals on the Form 1095-B does not apply to ALEs reporting on the Form 1095-C.  The ACA employer mandate remains fully in effect, and therefore so do the employer ACA reporting requirements via Form 1095-C.  ALEs sponsoring a self-insured medical plan are still required to complete Part III of the Forms 1095-C for individuals enrolled in that plan (even though that information is related to the same §6055 reporting requirements) and furnish the Forms 1095-C automatically to those individuals.

Note: Non-ALEs sponsoring a self-insured health plan (e.g., level funded employers under 50 full-time employees) can also take advantage of this §6055 furnishing relief. However, as with insurance carriers, they are still required to file the Forms 1094-B and 1095-B with the IRS.

ACA Reporting: Streamlined Reporting Options

ALEs meeting the federal poverty line affordability safe harbor may utilize the Qualifying Offer Method, provided the offer of coverage was also made available to the employee’s spouse and dependents, if any. The federal poverty line affordability safe harbor applies where the lowest possible monthly employee contribution for the major medical plan in 2023 did not exceed $103.23.

Note: The federal poverty line affordability safe harbor for offers in 2024 decreases to $101.93/month.

• For more details: The Ultra Low 2024 ACA Affordability Percentage

Under the Qualifying Offer Method, the employer does not complete Line 15 (the employee required contribution) of the full-time employee’s Form 1095-C, and entering a code on Line 16 is optional because by definition a “qualifying offer” is affordable and therefore no potential employer mandate penalty could apply. This streamlined reporting option is available because the monthly employee-share of the premium for the lowest-cost plan at the employee-only tier is not relevant for B Penalty purposes where coverage is deemed affordable for all employees under the federal poverty line affordability safe harbor.

The employer must check the “Qualifying Offer Method” box in Line 22 (Box A) of the Form 1094-C to take advantage of this approach. For full-time employees who are offered coverage, the employer will list Code “1A” (qualifying offer) in Line 14 of the full-time employee’s Form 1095-C.

There is also streamlined reporting available through the 98% Offer Method. This slightly streamlined reporting is generally available where the employer offers MEC that provides MV to at least 98% of its full-time employees.  Employers utilizing this method do not have to complete the monthly full-time employee count section (Part III, column (b)) of the Form 1094-C.

For more details:

• Key Decision Points in ACA Reporting Vendor Setup

• Streamlined ACA Reporting Methods

ACA Reporting: Dependent SSN Solicitation Process for Self-Insured Plans

For ALEs sponsoring a self-insured plan, Part III includes an SSN entry field for the employee and each covered dependent.  However, there is no requirement that the employee provide each covered dependents’ SSN, nor is there any requirement that the employer obtain each covered dependents’ SSN from the employee. What is required is that the employer act in a “responsible manner” to obtain each covered dependents’ SSN.

To act in a “responsible manner,” the employer must make three attempts to solicit each covered dependents’ SSN from the employee:

1. First Solicitation: Employer requests the SSN upon the employee’s election to enroll the dependent. This is referred to as the “account opened” solicitation.

2. Second Solicitation: Employer requests the SSN again within 75 days of the employee’s election to enroll the dependent. This is referred to as the “first annual solicitation”.

3. Third Solicitation: Employer requests the SSN a third time by December 31 of the year following the year the employee elected to enroll the dependent. This is referred to as the “second annual solicitation”.

If the employee fails to provide the dependent’s SSN after all three attempts, there is no requirement to continue to solicit the SSN. At this point (as well as during the solicitation process) the employer will enter the dependent’s date of birth in Part III, column (c) of the Form 1095-C (instead of the SSN in column (b)).

For more details:

• Newfront Compliance Considerations for Self-Insured Plans Guide

• ACA Reporting for Employers with a Self-Insured Health Plan

ACA Reporting Failures: Penalties

The general potential late/incorrect ACA reporting penalties for forms required to be furnished/filed in 2024 are $310 for the late/incorrect Forms 1095-C furnished to employees, and $310 for the late/incorrect Forms 1094-C and copies of the Forms 1095-C filed with the IRS (for a total of $620 per employee).

The 2024 maximum penalty for a calendar year will not exceed $3,783,000 for late/incorrect furnishing or filing. The employer is subject to a penalty of at least $630 per form—with no maximum—if the IRS finds that it intentionally disregarded the filing or furnishing of the correct Forms 1094-C and 1095-C in 2024.

The IRS reduces that general penalty if the late/corrected forms are furnished/filed in certain time periods:

• 30-Day Correction:

   If corrected within 30 days of the due date, the per-return penalty is $60 ($630,500 max in 2024).

• August 1 Correction:

   If corrected by August 1, the per-return penalty is $120 ($1,891,500 max in 2024).

There is also “reasonable cause” relief available that could potentially reduce or eliminate these ACA reporting penalties if the employer can show no willful neglect, that it acted in a responsible manner both before and after the failure occurred, and there were significant mitigating factors or events beyond its control. Those requirements are set forth in Treas. Reg. §301.6724-1.  IRS Publication 1586 includes a useful summary of the conditions to qualify for reasonable cause relief.

• For more details: ACA Reporting Penalties

ACA Reporting Corrections: Form 1094-C

Authoritative Transmittal: Correction Process

For corrections of Authoritative Transmittals, the IRS directs employers to:

• File a standalone, fully completed Form 1094-C with the corrected information included;

• Enter an “X” in the “CORRECTED” checkbox at the very top of the Form 1094-C; and

• Submit the standalone corrected Form 1094-C Authoritative Transmittal with the correct information included.

• Employers do not file Forms 1095-C or any other documents with the corrected Authoritative Transmittal Form 1094-C.

For more details: ACA Reporting Corrections

ACA Reporting Corrections: Form 1095-C

Forms 1095-C Not Filed with the IRS

Correcting Forms 1095-C that were not filed with the IRS requires only re-furnishing the corrected Form 1095-C to the employee. In this case, employers do not enter an “X” in the “CORRECTED” checkbox. Employers will instead write, type, or print “CORRECTED” on the new Form 1095-C furnished to the employee.

Forms 1095-C Filed with the IRS

In this situation, the employer will need to re-furnish the corrected Form 1095-C to the employee and re-file it with the IRS as follows:

• Fully complete a corrected Form 1095-C with the error(s) fixed;

• Enter an “X” in the “CORRECTED” checkbox on the Form 1095-C;

• Submit to the IRS the corrected Forms 1095-C with a nonauthoritative Form 1094-C transmittal;

• Do not mark the “CORRECTED” checkbox on the Form 1094-C filed with the corrected Forms 1095-C; and

• Furnish a copy of the corrected Form 1095-C to the employee.

For more details: ACA Reporting Corrections

State-Based Individual Mandate Reporting

The TCJA effectively repealed the ACA individual mandate by reducing the penalties to zero as of 2019.  As a result, the §6055 coverage information gathered in Part III of the Form 1095-C for a self-insured plan no longer has a clear federal reporting purpose.  

Nonetheless, several states have recently added their own state-based individual mandates in response to the effective repeal of the ACA federal individual mandate. Such states include California, Massachusetts, New Jersey, Rhode Island, and Washington D.C. Other than Massachusetts, these states typically rely on the §6055 reporting information by piggybacking off Part III of the Form 1095-C (provided to the state by the employer for self-insured plans) or Form 1095-B (provided to the state by the carrier for fully insured plans) to gather coverage information for residents.

Disclaimer: The intent of this analysis is to provide the recipient with general information regarding the status of, and/or potential concerns related to, the recipient’s current employee benefits issues. This analysis does not necessarily fully address the recipient’s specific issue, and it should not be construed as, nor is it intended to provide, legal advice. Furthermore, this message does not establish an attorney-client relationship. Questions regarding specific issues should be addressed to the person(s) who provide legal advice to the recipient regarding employee benefits issues (e.g., the recipient’s general counsel or an attorney hired by the recipient who specializes in employee benefits law).