Affordable Care Act (ACA) reporting is a yearly responsibility that can feel increasingly complex, especially as rules, thresholds, and penalties continue to change. For the 2026 reporting season — which covers the 2025 calendar year — Applicable Large Employers (ALEs) must prepare for updated affordability standards, rising penalties, and new options for delivering required forms to employees.
Understanding what is due, what has changed, and how to streamline the process can help your organization stay compliant and avoid costly mistakes.
What’s Due for the 2026 ACA Reporting Season
Under the Affordable Care Act, employers classified as Applicable Large Employers (ALEs) must report health coverage information to both employees and the Internal Revenue Service (IRS) using Forms 1094-C and 1095-C.
Here are the key deadlines for 2026:
Form 1095-C to Employees
Must be furnished to full-time employees by March 2, 2026. This form outlines the health coverage that was offered during the 2025 calendar year.
Forms 1094-C and 1095-C to the IRS
Electronic filings are due by March 31, 2026.
Electronic Filing Requirement
Employers filing 10 or more information returns are required to submit forms electronically.
Missing deadlines or filing incorrect information can result in significant penalties, making early preparation and accuracy critical.
What’s Changed for ACA Reporting in 2026
Several important updates will impact how employers approach ACA compliance this year.
Higher Affordability Threshold
The IRS has increased the ACA affordability percentage to 9.96%, up from 9.02% in 2025. This percentage determines whether an employer’s lowest-cost, self-only coverage option is considered affordable.
While the higher threshold offers slightly more flexibility in employer contribution design, it still requires careful calculation and documentation to ensure compliance.
Increased Penalties for Non-Compliance
ACA penalties continue to rise. Projected Employer Shared Responsibility Payment amounts include:
- Section 4980H(a) penalties exceeding $3,340 per employee (after the first 30 employees) for failing to offer coverage to at least 95% of full-time employees.
- Section 4980H(b) penalties exceeding $5,010 per affected employee for offering coverage that is unaffordable or does not meet minimum value standards.
With penalties assessed on a per-employee basis, even minor compliance gaps can quickly become costly.
New Alternative Furnishing Method
For the first time, employers may use an Alternative Furnishing Method instead of mailing paper copies of Form 1095-C.
Under this option, employers can:
- Post a clear and accessible notice on their website
- Explain how employees can request their Form 1095-C
- Keep the notice available through October 15, 2026
When implemented correctly, this option can significantly reduce printing and mailing costs while maintaining compliance.
Potential Impact of Expiring Subsidies
Enhanced premium subsidies are scheduled to expire, which could result in more employees seeking coverage through the Health Insurance Marketplace. This may increase the likelihood of employer penalty notices, particularly if affordability or coverage offer requirements are not properly met.
Accurate tracking and documentation will be more important than ever.
How Employers Can Simplify ACA Reporting
As requirements expand and penalties rise, simplification is key. Employers can take several proactive steps to reduce risk and administrative burden.
Leverage Technology and Automation
ACA reporting software can help:
- Track employee hours
- Monitor eligibility
- Generate required forms
- Flag potential compliance issues before deadlines
Automation reduces manual errors and saves valuable time during reporting season.
Apply IRS Safe Harbors
Using one of the IRS affordability safe harbors can simplify calculations and provide additional protection. Employers may use:
- Form W-2 safe harbor
- Rate of Pay safe harbor
- Federal Poverty Line safe harbor
These methods allow employers to demonstrate affordability without relying on household income data.
Monitor Eligibility Throughout the Year
Waiting until year-end often leads to compliance gaps. Ongoing monitoring of employee classifications — particularly variable-hour and seasonal employees — helps ensure coverage is offered to at least 95% of full-time employees.
Proactive tracking minimizes last-minute surprises.
Consider Digital Distribution Options
The new alternative furnishing method provides an opportunity to streamline distribution while remaining compliant. When visibility and accessibility requirements are properly met, this option can reduce administrative work and associated costs.
Staying Focused on Growth While Managing Compliance
ACA reporting is just one component of an employer’s broader compliance obligations. With rising penalties and evolving requirements, taking a proactive, structured approach to ACA management is essential.
By reviewing affordability calculations, monitoring employee eligibility throughout the year, leveraging automation, and preparing well before deadlines, employers can reduce risk and maintain compliance with confidence. Give us a call today to learn how Complete Payroll Services can help keep your company compliant.