ACA Forms 1095-C and 1094-C
Quick answer
- Who has to file?
- Applicable Large Employers - those averaging 50 or more full-time and full-time-equivalent employees in the prior calendar year.
- When is it due?
- Forms go to employees by 2 March and are e-filed with the IRS by 31 March.
- What does affordability mean for 2026?
- The lowest-cost self-only plan cannot exceed 9.96% of income under one of three IRS safe harbors.
Furnish 1095-C to employees: 2 March 2026
Paper file with IRS: 2 March 2026 (28 February fell on a Saturday)
E-file with IRS: 31 March 2026
E-file mandatory at: 10+ information returns, aggregated
Applies to: ALEs - 50+ full-time and FTE in the prior yearApplicable Large Employers report their offers of health coverage to the IRS on Form 1095-C, one per full-time employee, transmitted by a single Form 1094-C. The rules come from the IRS Affordable Care Act Information Returns programme and the Instructions for Forms 1094-C and 1095-C.
Who is an ALE
An employer that averaged 50 or more full-time employees, including full-time equivalents, across the prior calendar year. The count is done month by month and averaged - it is not a headcount taken on one day. Our guide to ACA measurement periods covers how full-time status is determined.
The two penalties
| Provision | Trigger | 2026 amount |
|---|---|---|
| §4980H(a) | Failure to offer minimum essential coverage to at least 95% of full-time employees | $3,340 per full-time employee |
| §4980H(b) | Coverage offered but unaffordable or below minimum value | $5,010 per affected full-time employee |
Minimum value means the plan covers at least 60% of the total allowed cost of benefits. Late or incorrect returns carry separate penalties under §6721 and §6722, running from roughly $50 to $530 per form depending on how late the correction is.
Affordability and the three safe harbors
For 2026 the affordability threshold is 9.96% of income, up from 9.02% for 2025. It moves every year, so a hardcoded percentage in a payroll rule is a defect waiting to surface.
- W-2 safe harbor - measured against Box 1 wages.
- Rate of pay safe harbor - measured against hourly rate times 130 hours, or monthly salary.
- Federal poverty line safe harbor - the simplest, applying regardless of individual income. For 2026 that works out to roughly $131 per month as the maximum employee cost for self-only coverage.
Furnishing and filing
Electronic filing is mandatory at 10 or more information returns, counted across all types together, not per form type. The Paperwork Burden Reduction Act allows employers to satisfy furnishing by posting a clear notice and providing the form on request, rather than mailing every employee automatically - but state rules can still require a mailing.
The IRS AIR system takes an annual maintenance shutdown from early December to early January, during which no federal filing is possible. Plan around it.
State filings
| State | Furnish | File |
|---|---|---|
| California (FTB) | 31 January | 31 March, automatic extension to 31 May |
| New Jersey | 2 March | 31 March |
| Rhode Island | 2 March | 31 March |
| Massachusetts | Form MA 1099-HC, separate regime | |
The IRS letters
- Letter 5699 - the IRS believes you were an ALE and did not file.
- Letter 226J - the initial employer shared responsibility payment assessment.
- Letters 227-K, 227-L, 227-M - the IRS response to your 226J reply.
- Notice 972CG - information return penalties for late or incorrect filing.
Enforcement typically surfaces 18 to 24 months after the filing year, so a letter arriving today usually concerns an earlier reporting year.
What data this filing needs
- ✓Month-by-month full-time status per employee, derived from your measurement periods
- ✓Offer of coverage per employee per month, mapped to a line 14 code
- ✓Employee share of the lowest-cost self-only premium, per month
- ✓Safe harbor applied per employee per month, mapped to a line 16 code
- ✓Enrollment and waiver status
- ✓Dependent names plus SSN or date of birth for self-insured plans (Part III)
- ✓Aggregated ALE group membership for the 1094-C
Where it goes wrong
- Line 14 and line 16 mismatch. The most common error and the one that most often triggers a Letter 226J.
- Full-time status derived from a different rule than the measurement period you actually operate.
- Affordability tested against a stale threshold. It changes annually.
- Missing dependent SSNs on self-insured plans, with no documented reasonable-cause solicitation.
- State filings forgotten. California, New Jersey and Rhode Island have their own deadlines and their own penalties.
Frequently asked questions
What is the difference between the 1095-C and the 1094-C?
The 1095-C is per employee. The 1094-C is the transmittal and employer-level certification covering all of them.
Do we have to mail 1095-Cs to everyone?
Not necessarily. Employers may post clear notice and furnish on request, but California, New Jersey and Rhode Island have their own furnishing rules.
What triggers a Letter 226J?
The IRS matching your 1094-C and 1095-C filings against marketplace premium tax credits claimed on individual returns.
How far back does the IRS go?
Enforcement typically surfaces 18 to 24 months after the filing year, so current letters concern earlier reporting years.
Which safe harbor should we use?
W-2, rate of pay, or federal poverty line. FPL is the simplest and applies regardless of income; the others depend on employee-specific data.
We are under 50 employees. Do we file?
Not as an ALE. Self-insured smaller employers may still have a 1095-B obligation.
Can we file on paper?
Only under 10 total information returns, counting all types together.
What if we filed with errors?
File corrected returns. Penalties under §6721 and §6722 scale with how late the correction is.
Systems supported: Praisidio reads from payroll, HRIS, time and attendance, benefits administration and scheduling systems - see the full integrations list.
This guide is general information about reporting requirements, not legal advice. Verify current deadlines, thresholds, rates and penalty amounts against the issuing agency before you file.