Understanding IRS Deadlines & Penalties For ACA Reporting

The Affordable Care Act (ACA) requires Applicable Large Employers (ALEs) to file ACA information with the IRS and provide 1095 forms to employees every year. These requirements help ensure compliance with the employer-shared responsibility provisions under the ACA. Missing important deadlines or failing to meet ACA reporting requirements can result in substantial penalties from the IRS.

The IRS implemented a permanent 30-day extension for the deadline to distribute Form 1095-C. This helps provide some flexibility for employers who need extra time. However, it is still critical for ALEs to understand the key deadlines and potential penalties to avoid issues.

ACA deadlines for the IRS

The IRS has set forth filing deadlines that ALEs must comply with for ACA reporting each year. 

The main forms involved are:

• Form 1094-C: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns
• Form 1095-C: Employer-Provided Health Insurance Offer and Coverage

Here are the key deadlines to know:

• February 28: The deadline for paper filing Form 1094-C and 1095-C with the IRS (Note: Starting January 1, 2024 the IRS reduced the number of forms that can be paper filed from 250 to 10). These forms provide details on health insurance that was offered and provided to full-time employees in the prior year.

• March 2: The extended deadline for furnishing Form 1095-C to full-time employees. Employees will use this form when filing their individual tax returns.

• March 31: The deadline for filing prior year returns electronically with the IRS. 

Missing these deadlines can result in penalties under IRC 6721 and 6722, which are outlined in more detail later in this article. It is critical for ALEs to get forms filed accurately and on time. 

Compliance with state ACA reporting 

In addition to federal reporting, some states also require ACA reporting at the state level. For example, California legislation has significantly changed ACA requirements for employers in the state.

By March 31, ALEs in California must file returns with the state for the prior calendar year. This includes forms 1094-C and 1095-C which contain healthcare coverage information. Failing to comply can result in penalties at the state level.

Always check in with your state department of insurance or taxation to understand requirements beyond federal ACA reporting. Partnering with a team that’s well-versed in multi-state compliance can help avoid any penalties.

IRS penalties for ACA reporting

The IRS takes ACA reporting requirements seriously and will issue substantial penalties to ALEs that fail to comply. Here are some of the most common penalty triggers:

• Not filing or late filing: Failure to file your required ACA returns with the IRS, or filing them past the deadline
• Incomplete or inaccurate filing: Errors or incomplete information on filed returns
• Issues meeting threshold: At least 95% of full-time employees must receive an offer of coverage that meets the MEC, MV, and Affordability requirements
• Failure to offer affordable coverage: Coverage must be affordable for full-time employees based on household income

Penalties for failure to file or furnish forms to the IRS are based on when the returns are actually filed. In addition, ALEs may face penalties under Section 4980H for failing to offer affordable minimum essential coverage. 

File with confidence this year 

Navigating ACA compliance can be tricky, but the right partner makes all the difference. Lean on dedicated experts who know the ins and outs of reporting requirements. By leveraging purpose-built software and support, you can file accurately and on time.

As a trusted leader in ACA compliance, Points North is here to guide you. Our compliance software, ACA Reporter, takes the guesswork out of tracking and reporting. It equips you with actionable data to make smart decisions. Meanwhile, our team stands ready to advise you based on years of experience even with complex cases.

Get compliant with confidence. Schedule a consultation to have our ACA pros assess your risks and create a filing plan tailored to your needs. We'll provide the expertise and ongoing support so you can reduce penalty risk. Partner with us for peace of mind.