ACA employer reporting lives on Forms 1094-C and 1095-C. If a business is an Applicable Large Employer (50 or more full-time equivalents), these forms are the annual record of health coverage offers: who got an offer, what the offer looked like, what the employee share of the lowest-cost self-only premium was, and who accepted. The IRS uses this data to assess employer mandate penalties under IRC 4980H and to confirm that individuals claiming premium tax credits on the marketplace weren't also offered employer coverage. Errors on 1094-C or 1095-C are the most common trigger for Letter 226-J penalty assessments, which can run into the millions for mid-sized employers.
What Each Form Covers Form 1095-C is the per-employee report. Each full-time employee (and any employee who enrolled in self-insured coverage) gets a 1095-C. The form reports monthly offer-of-coverage codes, the employee's share of the lowest-cost self-only premium each month, and coverage details.
Form 1094-C is the transmittal that aggregates all 1095-Cs for the employer. It reports total 1095-Cs filed, ALE membership status, and annual information the IRS uses to assess employer-mandate compliance. One 1094-C per employer (or per ALE member if a larger control group), plus one 1095-C per full-time employee.
The Codes That Matter Most Line 14 of 1095-C reports the offer of coverage using a two-character code each month (1A, 1B, 1E, etc.). The code signals whether the employee was offered minimum essential coverage, whether it was affordable, whether it provided minimum value, and whether the offer extended to spouses and dependents.
Line 15 reports the employee share of the lowest-cost self-only premium each month. Line 16 reports a safe-harbor or exception code where applicable (W-2 safe harbor, Federal Poverty Line safe harbor, Rate of Pay safe harbor, etc.). The interaction between Line 14 and Line 16 determines whether the employer is exposed to an affordability penalty.
What's the Filing Deadline? For tax year 2026 coverage, 1095-Cs must be furnished to employees by March 2, 2027, and filed with the IRS by March 31, 2027 (electronic) or February 28, 2027 (paper). The deadlines shift slightly each year. Electronic filing is required for employers filing 10 or more total information returns (1095-C, W-2, 1099, combined) under the IRS's e-filing threshold that applies broadly since 2024.
Common 1094-C and 1095-C Errors Four errors recur. First, incorrect Line 14 offer codes, particularly when the employee is in a waiting period or a measurement period. Second, misapplied safe harbor codes on Line 16, which can either understate or overstate affordability. Third, missing 1095-Cs for employees who were full-time during any month of the year, not just the month they were enrolled. And fourth, math errors where the totals on 1094-C don't match the individual 1095-Cs.
Each of these errors is what triggers Letter 226-J, the IRS penalty assessment letter for ACA employer mandate violations. The 226-J response process is detailed and time-sensitive; having clean records from the original filing makes the response manageable.
Building ACA Reporting Into the Year, Not Just January Three practices keep ACA reporting sustainable. Run measurement-period tracking monthly rather than year-end; variable-hour employees require ongoing measurement to determine their full-time status for ACA purposes. Reconcile payroll data against benefits enrollment quarterly; data drift between systems is the root cause of most reporting errors. And audit Line 14 and Line 16 codes before transmission to the IRS, not after.
The IRS publishes Forms 1094-C, 1095-C, and Instructions at irs.gov/affordable-care-act/employers . The ACA Information Returns (AIR) program handles electronic filing. For related concepts, see Affordable Care Act (ACA) , benefits , and benefits administration .
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