Understanding Health Plans, Year-End ACA Action Items and Employer Mandates for 2025–2026

Keeping the Affordable Care Act (ACA) and ACA reporting top of mind is key in reducing potential penalty exposure. The chance to reduce ACA penalty exposure starts with accurately tracking and classifying full-time employees, then ensuring coverage is offered to full-time employees and their dependents.

Open enrollment reminder: Ensuring your health plans meet ACA standards

Open enrollment is the ideal time to preserve ACA compliance for employers. The Affordable Care Act (ACA) requires applicable large employers to extend coverage to full-time employees and their dependents that offers minimum value, minimum essential coverage, and is affordable or potentially pay a penalty. What determines a compliant health plan that provides minimum value, minimum essential coverage and is affordable?

A health plan is compliant based on three criteria under the ACA: minimum essential coverage (MEC), minimum value (MV), and affordability.

Minimum essential coverage

Minimum essential coverage (MEC) is a requirement for employers to offer minimum essential coverage to at least 95% of their full-time employees and their dependents. A plan that meets MEC typically covers preventive services, emergency services, inpatient and outpatient care, and prescription drugs.

ACA minimum value standard

The ACA minimum value standard is a standard for employer-sponsored plans to ensure employers offer adequate coverage beyond basic preventive services. Health plans meet minimum value requirements if they pay at least 60% of the total allowed costs for a standard population and include substantial coverage of inpatient hospital services and physician services.

Affordability requirement

Affordability is a requirement that limits the amount of an employee's household income that can be required to be spent on their share of the premium for the lowest-cost self-only coverage that provides minimum value. The 2026 ACA affordability percentage is 9.96%. This means the employee's share cannot exceed 9.96% of their household income. The ACA provides safe harbors for employers to use when determining affordability based on factors such as the employee's W-2 wages, the employee's rate of pay, or the federal poverty line, rather than the employee's household income.

Do your health plans provide minimum essential coverage and meet the minimum value standard?
Are your health plans affordable?
What process does your organization have in place to ensure your health plans meet ACA compliance requirements?

ACA year-end reminders: 6 key actions for employers

ACA year-end reporting requires applicable large employers (ALEs) to annually file Forms 1094-C and 1095-C with the IRS and applicable states and provide statements to individuals about health coverage offered. To provide the right benefits, at the right time and to the right employees, employers must obtain and maintain accurate data. Tracking and reporting this information is a large part of complying with the ACA and avoiding potential penalties from the IRS and applicable state agencies. Are you and your vendor prepared for the following?

Determine ALE status: Verify if your business qualifies as an ALE (50+ full-time/FTE employees).
Track employee data: Accurately track full-time employees, offers of coverage, affordability calculations, and enrollment data monthly.
Prepare forms: Complete Forms 1094-C and 1095-C
Furnish forms 1095-C: Furnish forms 1095-C to employees (if you are not using the Alternative Manner of Furnishing (AMF) statements) by the IRS and applicable state agency deadlines. Furnishing deadlines: March 2 for IRS, Rhode Island, Washington D.C. and New Jersey and February 2 for California.
Notify employees: Post the required notice on your website about the availability of Form 1095-C upon request if you've decided to leverage the alternative manner of furnishing (AMF) statements. Please note that AMF does not apply to state health coverage reporting.
File Forms 1094-C and 1095-C accurately and timely: Submit accurate Forms 1094-C and 1095-C to the IRS and applicable state agencies by the appropriate deadline. Filing deadlines:

March 31 for IRS, New Jersey and Rhode Island
April 30 for Washington, D.C
June 1 for California

Don't overlook ACA reporting requirements and potential penalties

The employer shared responsibility provisions under the ACA require applicable large employers to offer health coverage that is "affordable" and that provides "minimum value" to their full-time employees and their dependents or potentially owe an employer shared responsibility payment to the IRS, if at least one of their full-time employees receives a premium tax credit for purchasing individual coverage on a health insurance marketplace. Additionally, ACA penalties may be assessed for failure to file timely and accurate information reporting. Did you know penalties are assessed on a per-employee and per-form basis?

Employer shared responsibility penalties for 2026 (tax year 2025)

A Penalty: $3,340 per full-time employee
B Penalty: $5,010 per full-time employee not offered affordable minimum value coverage

Timely and accurate information reporting penalties for 2026 (tax year 2025)

Corrected on or before April 30 is $60 per form.
Corrected from May 1 to July 31 is $130 per form.
Corrected after August 1 is $340 per form.

Failure to file and/or failure to furnish for 2026 (tax year 2025)

Failure to file correct information returns is $340 per form.
Failure to furnish correct payee statements is $340 per form.
Failure to both file correct information returns and failure to furnish correct payee statements is $680 per form.

Does your ACA strategy include a proactive approach to penalty avoidance?

ACA compliance and reporting continue to evolve. Confirming that your organization has a plan in place to manage the varying complexities is key to ensuring your business is compliant with all ACA employer reporting requirements related to health care reform.

Frequently asked questions (FAQ)

What is the ACA affordability percentage for 2026?

The ACA affordability percentage for 2026 is 9.96%, up from 9.02% in 2025.

What are the Form 1095-C furnishing deadlines?

The Form 1095-C furnishing deadlines are February 2 for California and March 2 for the IRS, New Jersey and Rhode Island.

What are the ACA filing deadlines?

The ACA filing deadlines are March 31 for the IRS, New Jersey, and Rhode Island; April 30 for Washington, D.C, and June 1 for California.

What is the alternative manner of furnishing statements?

Under the alternative method of furnishing statements, employers are no longer required to send Form 1095-C to individuals automatically. The requirement for furnishing the statement is met if the employer responsible for providing the statements provides clear, conspicuous, and accessible notice on its website that an individual may request a copy of their statement, and the copy is furnished in a timely manner. For this purpose, the statement is timely furnished if provided to the individual no later than the later of January 31, 2026, or 30 days after the date of the request.

What are the employer shared responsibility penalty amounts?

The employer shared responsibility penalty amounts are $3,340 per employee for the A penalty and $5,010 per employee for the B penalty.

What are the information reporting penalty amounts?

The information reporting penalty amounts are $60 per form if corrected on or before April 30, and $130 per form if corrected May 1 – July 31, and $340 per form if corrected after August 1.

What is the penalty amount for failure to furnish Forms 1095-C?

The penalty amount for failure to furnish Forms 1095-C is $340 per form.

What is the penalty amount for failure to file Forms 1094-C and 1095-C?