For the 2024 calendar year, Applicable Large Employers (ALEs) must distribute Form 1095-C to eligible employees by March 3, 2025. Forms 1094 and 1095-C must be filed with the IRS by March 31, 2025, when filing electronically. The affordability rate for 2025 plan years will rise to 9.02%. ALEs filing 10 or more forms, including Forms 1094-C and 1095-C, must file electronically.
ALEs, businesses with 50 or more full-time employees or full-time equivalents (FTEs) in the prior year, must comply with ACA reporting. ALEs must submit specific forms to the IRS, documenting the health coverage offered to full-time employees, and provide these forms to employees. Non-compliance can lead to penalties. ALEs must offer affordable health insurance to full-time employees to meet ACA standards and avoid penalties.
To calculate FTEs for ACA reporting, add hours worked by employees working fewer than 30 hours per week or 130 hours per month. Divide the total by 120 to get the FTE count for the month. Add this to the number of full-time employees. The annual average of this total determines if the business qualifies as an ALE subject to Employer Shared Responsibility (ESR).
To meet ACA requirements, ALEs must provide affordable and adequate health coverage to full-time employees and their dependents. If any employee receives a premium tax credit from a government marketplace, the employer faces penalties. Coverage must be affordable (no more than 9.02% of annual payroll in 2025) and meet the minimum value standard (covering at least 60% of total benefits). ALEs must report coverage details using Forms 1094-C and 1095-C.
If an ALE fails to provide minimum essential coverage (MEC) to 95% of full-time employees and their dependents, it faces a $2,000 penalty per employee (adjusted annually for inflation) under the 4980H(a) assessment, if an employee receives a premium tax credit. If the ALE offers coverage to 95% of employees but it doesn’t meet affordability or minimum value standards, it faces a $3,000 penalty per employee under the 4980H(b) assessment.
ALEs should gather key information for year-end ACA reporting, including the Employer Identification Number, business contact details, total employees and full-time employees each month, average hours worked, insurance offer status, coverage type, employee cost for minimum essential coverage, employee names and SSNs, and proof that 95% of full-time employees and dependents were offered MEC. Proper data collection ensures timely completion of required IRS forms and ACA compliance.