Certain employers, plan sponsors, and insurers are required to report health plan information and participant coverage data to the IRS each year. The IRS uses this information to administer and regulate various aspects of the Affordable Care Act (ACA), including an individual’s eligibility for a premium tax credit when purchasing health insurance through a public Marketplace and the §4980H employer shared responsibility rules. Failure to report complete, accurate, timely information can result in significant reporting penalties up to $340/form.

Employer Reporting Responsibilities

Applicable Large Employers (ALEs)

All ALEs (those with at least 50 full-time equivalents (FTEs)) are required to report on offers of coverage to full-time employees. ALE status is determined by averaging FTEs for the previous calendar year. For example, if an employer averaged 50 or more FTEs during 2024 (alone or as part of a larger controlled group or affiliated service group), the employer is an ALE for 2025 and required to report offer of coverage information early in 2026 (for the 2025 calendar year). ALEs report offer of coverage information using Forms 1094-C and 1095-C. Offer of coverage reporting on the “C” forms will never be handled by the carrier but instead must be done by the employer or a vendor on behalf of the employer.

Employers Offering Self-Funded Group Health Plan Coverage

Any size employer who provided self-funded (including level-funded) coverage during 2025 must report coverage information for all individuals enrolled in the plan, including employees, non-employees (e.g., owners, retirees, COBRA participants), and their spouses and dependents. Small employers (<50 FTEs, non-ALEs) report this coverage information using Forms 1094-B and Form 1095-B. ALEs generally report this coverage information in Part III of the Form 1095-C.

Timing of Reporting

Employer reporting is required annually and is done early in the year for the previous calendar year. Reporting is based on calendar-year data (even for employers with a non-calendar-year medical plan). 

Reporting Method of Delivery

Distribution to Individuals

The options for distribution of Form 1095s are: (i) hand delivery; (ii) mail; (iii) electronically if individuals consent to electronic delivery; or (iv) NEW as of 2024 - post a notice of availability.

Posting Notice of Availability

Distribution to individuals can be satisfied by providing a “clear, conspicuous and accessible notice” that the forms are available upon request. The notice must include an email address, physical address, and telephone number that can be used to request a copy of Form 1095. Notice must be posted on the employer’s public-facing website so that it is accessible to all possible Form 1095 recipients. The notice must be posted by March 2 and remain posted through October 15. If a Form 1095 is requested, it must be provided within 30 days and would have to be hand-delivered or mailed unless the employer obtains consent to provide Form 1095 electronically.

IRS Submission

For almost all employers, Form 1094 and all Form 1095s must be submitted to the IRS electronically.
Electronic Filing Requirements

Employers who file 10 or more tax forms must file electronically (previously, only those filing 250 or more forms were required to file electronically). The count includes not only Form 1094 and Form 1095s, but also any other information tax returns the employer may file during the year (e.g., W-2s or 1099s), and therefore, almost all employers will be required to file electronically. This is also true for any corrections that may need to be filed. Most employers use the services of a vendor or reporting software to handle the electronic transmittal to the IRS.

State Coverage Reporting

A handful of states (CA, MA, NJ, and RI) and D.C. have individual coverage mandates requiring residents to have minimum essential coverage or pay a state tax penalty. To enforce these mandates, these states require group health plans, both fully-insured and self-funded, to report coverage information to the states. Employers offering group health plans with covered individuals residing in these states may be required to send reporting to the state tax department in addition to the coverage information submitted to the IRS. In most cases, the same Form 1094 and Form 1095s can be sent to the applicable state tax department to satisfy the reporting requirement. NOTE: Posting notice of availability for Form 1095s as permitted by the IRS may not satisfy state distribution requirements.

Resources

IRS forms and instructions for 2025 reporting (due in early 2026) can be found on the IRS website at:

• https://www.irs.gov/forms-pubs/about-form-1094-c 
• https://www.irs.gov/forms-pubs/about-form-1095-c  
• https://www.irs.gov/forms-pubs/about-form-1094-b 
• https://www.irs.gov/forms-pubs/about-form-1095-b