Managing Affordable Care Act Reporting Requirements Due in 2026

If you’re an Applicable Large Employer (ALE) — that's generally any business with 50 or more full-time equivalent employees — you'll need to get your health coverage reporting forms ready. Affordable Care Act compliance 2026 preparation includes updated affordability thresholds and remote-work considerations, making accurate data tracking more important than ever.

The best way to stay ahead is to start planning now. Getting organized early and making sure your payroll and benefits tools are talking to each other can help businesses stay compliant and avoid costly ACA reporting penalties.

ACA Reporting Deadlines: Important Dates for 2026

Businesses subject to ACA program requirements for tracking and reporting have several deadlines to meet if they want to be in ACA compliance, including specific dates to furnish forms to employees and filing forms to the IRS. The IRS permanently provided an automatic 30-day extension from the January 31 due date for ALEs to provide forms 1095-C to applicable employees, which means no additional extensions are available.

The submission date for ACA filing of all paper forms with the IRS remains February 28. However, the deadline is March 31 if filing electronically. The due date is the next business day if it falls on a weekend or legal holiday. Note that all employers that file a combined total of 10 or more information returns, including Forms 1094-C and 1095-C, must file the forms electronically.

For the 2026 reporting year, here are the details you need to know:

• You must provide eligible employees with copies of Form 1095-C by the deadline of March 2, 2026.
• If you’re electronically filing Forms 1094-C and 1095-C with the IRS, do it by March 31, 2026.
• If you’re filing 10 or fewer returns, the paper-filing deadline is March 2, 2026.

Note that these are expected due dates. The IRS had not issued final due dates at the time this article was updated.

The ACA affordability rate in 2026 increases to 9.96% (up from 9.02 for the 2025 plan year). Keep this threshold in mind as you price the lowest-cost, self-only plan for safe harbor testing.

Who Is Required To Report Under the Affordable Care Act?

Applicable large employers (ALEs) are required to report under the Affordable Care Act. This includes filing specific forms with the IRS to document the health coverage offered to full-time employees. ALEs must also provide copies of these forms to their employees to ensure transparency and compliance with ACA regulations.

What Is an Applicable Large Employer?

An applicable large employer (ALE) has an average of 50 or more full-time employees, including full-time equivalent employees (FTEs), during the prior year. This ALE definition is crucial since only ALEs are subject to the ACA's Employer Shared Responsibility (ESR) provisions.

If your business qualifies as an ALE, you must offer affordable health insurance to your full-time employees and fulfill applicable ACA reporting requirements for the following year. For example, your 2025 employee counts determine your 2026 reporting obligations.

What Are the ACA Reporting Requirements for Employers?

ACA program requirements for employers that meet the ALE threshold include submitting all the proper forms under the ACA. If you don’t understand how ACA works, you could face potential penalties each year. The key is accuracy. The data you’ll need comes directly from your payroll and benefits records, so keeping those systems in sync throughout the year can save significant time later.

One emerging challenge for Affordable Care Act compliance in 2026 is calculating full-time equivalents when staff are hybrid or remote. Tracking hours across locations or flexible schedules requires consistent reporting. Ideally, you’ll have connected payroll tools that help you avoid miscounts and compliance gaps.

Calculating Full-Time Equivalents for ACA Reporting

Figuring out whether your business qualifies as an ALE for 2026 starts with calculating full-time equivalents (FTEs) using 2025 data. Here’s how it works:

• Add up all hours worked in 2025 by employees who averaged less than 30 hours per week (or 130 hours in a given month). Count no more than 120 hours per employee per month.
• Divide the total part-time hours by 120 to get your FTE count for that month.
• Add this number to the total regular full-time employees for each month.

The total number of full-time employees, including full-time equivalents for each month in the preceding calendar year divided by 12 determines whether ALE shared responsibility (ESR) provisions apply.

As more teams operate in hybrid or remote environments, make sure your time-tracking and payroll systems accurately capture hours worked regardless of where or when employees are working. Consistent, centralized tracking helps prevent undercounts that could affect your ALE determination.

ACA Reporting Requirements and Health Coverage Offered to Employees

To fulfill ACA compliance, employers that meet the ALE threshold must offer adequate and affordable health insurance coverage to full-time employees and their dependents or risk an assessment.

ALEs document this by completing Forms 1094-C and 1095-C, which report information about health insurance coverage offered. If at least one full-time employee receives a premium tax credit or cost-sharing reduction through a government marketplace, and your coverage doesn’t meet these standards, your business could face a penalty.

The ACA defines affordable coverage as health insurance that costs the employee no more than a certain percentage of their household income — specifically for the lowest-cost, self-only plan that meets minimum essential coverage. This percentage is adjusted for inflation each year. For plan years beginning in 2026, that threshold is 9.96%

Plans must also meet a minimum value (MV) threshold. This means they must cover at least 60% of the total allowed cost of benefits under the plan.

How To Determine Affordability

Recognizing that it is difficult for employers to know their employees' household incomes, the U.S. Department of Treasury provides the following three safe harbors in the ESR final regulations that can be used to assess the affordability of an offer of coverage in lieu of using household income.

• W-2 Safe Harbor: An ALE's offer of coverage for every month of a calendar year is considered affordable if the employee's required contribution for the lowest cost, self-only coverage that provides MV for the calendar year does not exceed 9.96% (as of 2026) of the wages paid to the employee by the employer as reported in Box 1 of the Form W-2. Special rules apply for partial years of employment.
• Rate of Pay Safe Harbor: An ALE's offer of coverage for a calendar month is affordable if the employee's monthly required contribution for the lowest cost, self-only coverage that provides MV does not exceed 9.96% (as of 2026) of an amount equal to 130 hours multiplied by the lower of the employee's hourly rate of pay as of the first day of the coverage period or the employee's lowest hourly rate of pay during the month for an hourly employee, or of the employee's monthly salary for a non-hourly employee.
• Federal Poverty Line Safe Harbor: An ALE's offer of coverage for a calendar month is affordable if the employee's required contribution for the calendar month for the lowest cost, self-only coverage that provides MV does not exceed 9.96% (as of 2026) of the federal poverty line for a single individual for the calendar year divided by 12.

For example, consider an ALE that offers coverage to full-time employees and their dependents. The employee monthly share of the lowest cost, self-only coverage is $200.

• Discount: If the plan has a $50 monthly premium discount for participating in mindfulness app sessions or completing comprehensive health screenings, that discount is disregarded when determining the employee's required contribution, regardless of whether the employee participated. However, if the discount relates to a tobacco cessation program, the employee's contribution would be $150.
• Surcharge: Some plans might include a $50 per month premium surcharge for employees who don’t participate in ergonomic workspace assessments for remote work. This surcharge increases the employee's required contribution to a total of $250 ($200 + $50) monthly for ESR purposes. A tobacco-use surcharge, by contrast, would not increase the contribution for ESR purposes.

Additional factors can also affect affordability. For instance, if an employer offers a payment to an employee instead of enrolling in the employer's health insurance plan, this opt-out payment impacts the affordability calculation. For ESR purposes, the guidance provides:

• Unconditional Opt-Out: Payments increase an employee's required contribution by the payment amount.
• Conditional Opt-Out: Payments do not increase an employee's required contribution by the amount of an opt-out payment. These payments are contingent on the employee annually providing reasonable evidence — such as an attestation — that they and their expected tax family have or will have minimum essential coverage under a group health plan during the relevant coverage period.

Similarly, employer contributions to a Health Reimbursement Arrangement (HRA) and health flex credits under the Section 125 cafeteria plan may impact an employee's required contribution as follows:

• HRAs: Employer contributions to HRAs generally reduce an employee’s required contribution, as long as the HRA is integrated with an employer-sponsored health plan and employees can use it to pay premiums for an eligible employer-sponsored plan, cost-sharing, and/or health benefits not covered by the plan.
• Health Flex Credits: Employer contributions to health flex credits can reduce the employee’s contribution only if the credit is limited only to pay for minimum essential coverage (health insurance plan)or medical costs (medical, dental, vision, Health FSA, HSA) expenses as defined under Internal Revenue Code § 213.

Assessments for Failure To Offer Affordable and Adequate Health Insurance

If an applicable large employer doesn’t meet ACA coverage requirements, the employer risks being assessed by the IRS under the Employer Shared Responsibility provisions, known as 4980H(a) and 4980H(b).

The 4980H(a) assessment applies when an ALE does not offer minimum essential coverage (MEC) to at least 95% of its full-time employees and their dependents, and at least one full-time employee receives a premium tax credit when purchasing health insurance in a government marketplace. The payment is adjusted annually for inflation. For 2026, that penalty is $3,340 per full-time employee, after excluding the first 30 employees.

There is also a 4980H(b) assessment. This applies when an ALE offers coverage to 95% of its full-time employees but the coverage offered does not meet the minimum value and affordability stipulations. In this case, the penalty is $5,010 per affected employee for 2026 (adjusted each year for inflation), but it only applies to those who receive a government marketplace premium tax credit or cost-sharing reduction provided by the IRS.

Taking time each year to review your plan’s affordability calculations and confirm that coverage meets minimum value standards can help prevent unnecessary costs and ensure your business stays compliant.

Gathering and Submitting Data To Meet ACA Reporting Requirements

Each year, ALEs subject to ACA program requirements must compile data on applicable employees and submit this information to the IRS. To stay compliant, it’s important to track this information throughout the year — not just at tax time. Attention to detail with all forms and ACA rules for employers is vital since any missteps, inaccuracies, or delays in processing can result in penalties and interest.

Required ACA Forms for Reporting: Forms 1095-C and 1094-C

The first reporting requirement for ALEs is to provide a copy of Form 1095-C to every full-time employee, regardless of whether they enrolled in the company-sponsored health plan. Employers must also keep a copy of every 1095-C form to send to the IRS to fulfill ACA reporting requirements. Correctly filling out lines 14 through 16 on this form can be particularly challenging for many people.

Employers must also meet Form 1094-C filing requirements. Form 1094-C acts as an Affordable Care Act summary for the aggregated 1095-C forms. It includes helpful information to the IRS, including your Employer Identification Number (EIN), contact information, and the total number of employees.

Preparing for ACA Year-End Reporting

Preparing for ACA year-end reporting starts well before forms are due. An ALE should have a variety of information, including but not limited to:

• Employer Identification Number (EIN) and business contact information
• Primary company contact name and their details
• Total number of employees each month
• Total number of full-time employees each month
• Average hours worked by each employee per month
• Health insurance offer details for each full-time employee
• Type of insurance coverage offered (if applicable)
• Monthly cost to each employee for the lowest-cost, self-only minimum essential coverage providing MV that is offered
• Employee names and Social Security numbers
• Proof that 95% or more of full-time employees and their dependents were offered minimal essential coverage

Collecting and verifying this data throughout the year helps ensure accurate, penalty-free ACA filing at year-end.

Submitting Your Required ACA Forms to the IRS

Once your Forms 1094-C and 1095-C are complete, it’s time to submit them to the IRS. As with traditional business tax returns, employers can file either electronically or on paper, but most are now required to e-file. If you file 10 or more information returns, which include Forms 1095-C, you must file all forms electronically.

Electronic filing provides faster processing, confirmation of receipt, and fewer manual errors. But regardless of the method you choose, double-check that all data matches your records before submission to avoid unnecessary IRS corrections or penalty notices.

Prepare for ACA Year-End Reporting in Advance

Verifying, cataloging, and reporting accurate data takes considerable time. Starting the process early helps avoid an unnecessary last-minute rush to gather information and costly late fees and penalties due to inaccuracies.

Beginning in the third or fourth quarter, review your employee records to ensure that all personnel data is accurate and current. This includes cross-referencing facts such as employee hire dates, average hours worked, and benefit eligibility for any employees who may have become newly full-time during the year.

Simplify ACA Compliance Through Outsourcing

ACA reporting can be difficult and costly, especially when you’re managing payroll, benefits, and employee eligibility on your own. Partnering with a provider that offers integrated benefits, payroll, and Affordable Care Act insurance data can relieve much of the burden at reporting time. Many providers also use AI-powered compliance monitoring and proactive alerts to flag potential reporting issues or regulatory changes before they become costly problems.

An ACA reporting service, like the Paychex Employer Shared Responsibility Services, monitors your ALE status, FTE hours, and the type and affordability of your offered coverage throughout the year.* You can also receive help with end-of-year reporting, including lines 14, 15, and 16 of Form 1095-C for each employee.