Welcome to the fourth post in our series: "ACA Essentials: Does ACA Compliance for Small Businesses Apply to Me?"

Beginning in 2016, the Affordable Care Act (ACA) and IRS reporting requirements dictate that insurers, small employers with self-insured health plans, and all Applicable Large Employers (those with 50 or more full-time and full-time equivalent employees (FTEs) must report certain information about health coverage to the Internal Revenue Service (IRS) and provide full-time employees and covered individuals with an annual statement.

The reporting must be completed and filed with the IRS using either Forms 1094-B and 1095-B or Forms 1094-C and 1095-C Similar to the W-2 system, a copy of the 1095-C or 1095-B (or an appropriate substitute statement) must be provided to each employee.


Originally, employers were required to provide the forms to their employees by February 1, 2016 and file them with the IRS by February 29, 2016 (or March 31, 2016 if filing electronically). However, in December 2015, the IRS extended these deadlines. For the 2015 calendar year only, employers have until March 31, 2016 to provide the forms to their employees and until May 31, 2016 (or June 30, 2016, if filed electronically) to file the forms with the IRS. In subsequent years, the forms must be filed with the IRS by February 28 (or March 31 if filed electronically) and provided to your employees by January 31.

What do these forms report?

Form 1095-C generally reports information about the health insurance coverage offered to employees, even if they chose not to enroll. Form 1095-B reports information about whether and to what extent employees and their families had qualifying health coverage during the year.

Why must they be filed?

Beginning in 2014, most Americans were required to obtain minimum essential coverage or pay a penalty (known as the "individual mandate"). These forms will assist the IRS in identifying which individuals were offered or had coverage through their respective employers.

Additionally, the information provided on these reports will be used to determine if an Applicable Large Employer member will be subject to the employer mandate penalty, and if an individual is eligible for a premium tax credit.

Requirements for applicable large employers:

If the employer had 50 or more full-time and FTE employees in the preceding calendar year, the employer must complete and file Forms 1095-C and 1094-C, even if the employer didn't offer health coverage. A copy of Form 1095-C must also be provided to employees. Large employers with fully insured plans (or no health plan) complete Sections I and II of the 1095-C, and large employers with self-insured plans complete Sections I, II, and III.

"Controlled Groups" and related employers:

If the employer is part of a controlled group, the employer must combine all employees of each company when making the calculation of whether they have 50 or more full-time and FTE employees. Controlled groups exist when any two or more entities are treated as a single employer under section 414 (b), (c), (m), or (o) of the Internal Revenue Code. Where the combined total of full-time and FTE employees in a controlled group is 50 or more, each individual employer is subject to reporting with respect to its own common law employees (or prior employees). For more information and examples of controlled groups, see ADP's Eye on Washington, Affordable Care Act (ACA) Update Series: Which Employers Are Subject to the Shared Responsibility Provisions?

Requirements for small employers:

If an employer has fewer than 50 full time and FTE employees and has a self-insured health plan, the employer must file Form 1094-B and 1095-B with the IRS and provide a copy of the 1095-B to employees. If the employer has fewer than 50 full time and FTE employees and a fully insured health plan (or no health plan), the employer isn't subject to the reporting requirements for the year.

Note: Employees of small employers with fully insured plans should receive a copy of the 1095-B from the insurer.

Click here to view the published guidance on the IRS reporting requirements for health insurance coverage offered under employer-sponsored plans.

Read the rest of the series:

Introduction: ACA Essentials: Does ACA Compliance for Small Businesses Apply to Me?

Part 1: ACA Essentials: Aspects of the ACA for Small Businesses to Be Aware Of

Part 2: ACA Essentials: Do I Qualify for Any Health Care Tax Credits for Small Businesses?

Part 3: ACA Essentials: The Small Business Health Options Program (SHOP) Marketplace

Part 5 : ACA Essentials: The Employer Mandate and What it Means for You

Part 6: ACA Essentials: Clarifying the Health Care Exchange Notices Process

Visit and subscribe to ADP's "Eye on Washington" for the latest on Health Care Reform and other regulations impacting employers: https://www.adp.com/tools-and-resources/adp-research-institute/research-topics/legislative-updates.aspx

Tags: Compliance aca Benefits Health Care Reform