This article explains what IRS Forms 1095-C and 1094-C are, who must file them, and how they relate to Affordable Care Act (ACA) compliance.

In this article:

Overview

Form 1095-C

Form 1094-C

Employer Categories and Reporting Requirements

Applicable Large Employers (ALEs)

Non-ALE Employers

Aggregated ALE Groups

Frequently Asked Questions

Forms Overview

Forms 1095-C and 1094-C are used by employers to report information about employer-sponsored health coverage under the Affordable Care Act (ACA).

They allow the IRS to:

• Verify if an employer met its Employer Shared Responsibility (ESR) requirements, and

• Determine if employees qualify for premium tax credits.

Key difference:

• Form 1095-C is provided to each full-time employee and filed with the IRS.

• Form 1094-C is the transmittal (summary) form submitted only to the IRS.

Reporting is always based on the calendar year, even if the employer’s plan year differs.

[ACCORDION] Form 1095-C

Each full-time employee must receive a Form 1095-C, whether or not they enrolled in the employer’s health plan.

The form includes:

• Details of the offer of coverage (if made)

• The lowest-cost premium for employee-only coverage

• The employee’s share of the premium

• Any safe harbor codes used to determine affordability or compliance

Employees use this form when filing their individual tax returns to show proof of coverage.

[ACCORDION] Form 1094-C

Form 1094-C serves as a cover sheet for the batch of 1095-Cs filed with the IRS.

It includes:

• The employer’s legal name and FEIN

• The total number of 1095-Cs submitted

• Information about aggregated ALE group membership (if applicable)

• Certification that coverage was offered to at least 95% of full-time employees

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Deadlines and Penalties

Electronic filing is mandatory for employers submitting 10 or more combined forms (1094/1095 series).

Employer Categories and Reporting Requirements

Employer responsibilities for ACA reporting depend on whether the company is an Applicable Large Employer (ALE), a Non-ALE, or part of an Aggregated ALE Group.

[ACCORDION] Applicable Large Employers (ALEs)

An ALE is any employer (including related entities) that had 50 or more full-time employees, including full-time equivalents (FTEs), on average during the prior calendar year.

Responsibilities:

• Offer affordable, minimum-value coverage to at least 95% of full-time employees and their dependents.

• File Forms 1094-C and 1095-C annually under ACA Section 6056.

Penalties for non-compliance:

• Failure to file or furnish accurate forms can result in IRS penalties under Sections 4980H(a) or 4980H(b).

• Typical penalty: $310 per form, with an annual cap of $1.26 million (indexed annually).

[ACCORDION] Non-ALE Employers

Employers with fewer than 50 full-time employees (including FTEs) on average during the prior year.

Key points:

• Not subject to the employer mandate or ACA ESR penalties.

• Do not file Forms 1094-C or 1095-C.

• If offering fully insured coverage, the insurance carrier typically reports on behalf of the employer using Forms 1094-B and 1095-B.

• If offering self-funded coverage, the employer must file Forms 1094-B and 1095-B directly for all covered employees and dependents.

[ACCORDION] Aggregated ALE Groups ( Groups with Multiple Entities )

When companies are related through common ownership or control, the IRS treats them as a single Aggregated ALE Group. The total number of full-time and FTE employees across all entities determines ALE status.

Reporting responsibilities:

• Each entity (EIN) files its own 1094-C and 1095-Cs.

• Each 1094-C must list all other group members in Part IV.

This allows the IRS to assess compliance across the entire controlled group.

Common challenges:

• Misidentifying ALE status due to fragmented HR or payroll systems

• Confusion about which entity employs each worker

• Inconsistent tracking of coverage offers and affordability across entities

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Frequently Asked Questions

[ACCORDION] How will clients and employees receive these forms?

Eligible employees will receive the relevant forms via secure email. Deel PEO can also be contacted to provide a digital copy of the form if necessary.

[ACCORDION] Do I need to file 1095-Cs if my company has fewer than 50 employees?

No. Only ALEs (50+ FTEs) must file 1095-C/1094-C. Non-ALEs may file 1095-B/1094-B if they sponsor self-funded health plans.

[ACCORDION] What happens if these forms are filed late or with errors?

The IRS may impose penalties per form for late, missing, or inaccurate filings.

[ACCORDION] Is the reporting based on the plan year or calendar year?

Reporting is always based on the calendar year, regardless of the employer’s plan year.